(Solved): 4. Total cost, average cost, and marginal cost in the short run Suppose Raphael runs a small busin ...

4. Total cost, average cost, and marginal cost in the short run Suppose Raphael runs a small business that manufactures shirts. Assume that the market for shirts is a price-taker market, and the market price is $25 per shirt. The following graph shows Raphael's total cost curve. Use the blue points (circle symbol) to plot total revenue, and the green points (triangle symbol) to plot profit for the first seven shirts that Raphael produces, including zero shirts, TOTAL COST AND REVENUE (Dollars) 175 150 125 100 75 25 -50 8 2 3 QUANTITY (Shirts) Total Cost Total Revenue Profit Calculate Raphael's marginal revenue and marginal cost for the first seven shirts he produces, and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost. 9 Calculate Raphael's marginal revenue and marginal cost for the first seven shirts he produces, and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost. ? COSTS AND REVENUE (Dollars per shirt) 40 35 30 2 2 2 15 6 10 S 2 3 5 QUANTITY (Shirts) Firm Raphael's profit is maximized when he produces 6 Marginal Revenue would maximize his profit) is s , which is maximizing quantity corresponds to the intersection of the last condition can also be written as -8- which is shirts. When he does this, the marginal cost of the last shirt he produces is s than the price Raphael receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than than the price Raphael receives for each shirt he sells. Therefore, Raphael's profit- curves. Because Raphael is a price taker, this Marginal Cost Grade It Mem CENGAGE MINDTAP Apila Homework Production and Cost in the Firm Cat Pas marrevenue and margmalt kor the first seven shots he produces, and pe them on the g jos need to pat marginal revenue and the range pe symb) to pe marginal CORTS AND REVENUE pesh === her's profesimized when he p than the price Raphael be the profits quantity corresp pitater les 1 Q A N NO QUANTITY 2 W S tersection of the . 3 E D shit when he does this the marginal cost of the last the produce marginal cost of producing additional shit that is shut he sets. Therefore, P price Raphael receives for each curves $ 4 than R Mag X C Magel % 5 F T MacBook Pro 6 Grad Now G Y B & 7 H Sa Cont C GAGE MINDTAP mework: Production and Cost in the Firm late Raphael's marginal revenue and marginal cost for the first seven shirts he produces, and plot them on the (circle symbo) to piot marginal revenue and the orange points (square symbol) to plotmarginal cost Q 1 A hael's profit is maximired when he produces than the price Raphael receives t which is d maximize his profit) is ming quarity comesponds to the intersection of the condition can also be written at 02 1 2 QUANTITY() W S Q # 3 greater E C Jess $ 4 R Marginal Revenu ts. When he does this, the marginal cost of the last shirt be pe te sels. The marginal cost of producing an additional shirt ( than the price Raphael receives for each shirt he sells. The curves Because n Marginal Cost % 5 T MacBook Pro 6 Grade It Now 2 Y 27 & = and Cost in the Firm revenue and marginal cost for the first seven shirts he produces, and plot them on the following graph marginal revenue and the orange points (square symbol) to plot marginal cost. QUANTITY() sh red when he produces ce Raphael receives for each shi ONS which is sponds to the intersection of the written as 43 ? E D $ 4 R marginal cost and total revenue total cost and profit total revenue and profit marginal cost and marginal revenue total cost and marginal revenue total cost and total revenue F Marginal Revenue P Marginal Cost 45 T G ost of the last shirt he produces s ng an additional shirt (that is, one more Jeach shirt he sets. Therefore, Raphaets curves. Because Raphael is a price < 6 Grade It Now MacBook Pro Y & 7 T U Save & Co Continue witho .CO CENGAGE MINDTAP Aplia Homework Production and Cost in the Firm Calculate Raphael's marginal revenue and marginal cost for the first seven shirts he produces, and plot the points (cincle symbo) to plot marginal revenue and the orange points (square symbol) to plat marginal com (?) COSTS AND REVENUE (Dolars per sh # 25 Raphael's profit is maximized when than the price Rapha would maximize his profit) is maximizing quantity corresponds to les condition can also be written as 1 Q QUANTIT 92 W PMC Profe=TR-TC MC = TR Profit MR-MC TC-TR 43 # E 54 Marginal Revenue rts When he does this, the marginal cost of the he sells. The marginal cost of producing an add than the price Raphael receives for each shart Out R Marginal Cost E % ?? ? 5 1 Grade MacBook 6