Question

1. Profit maximization using total cost and total revenue curves Suppose Musashi runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is $20 per shirt. The following graph shows Musashi's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for shirts quantities zero through seven (inclusive) that Musashi produces. ? 200 175 Total Revenue 150 125 Total Cost Profit 100 TOTAL COST AND REVENUE (Dollars) 75 D 50 25 0 -25 QUANTITY (Shirts)
Blank 3 options: greater / less

Blank 5 options: greater / less

Blank 6 options: total revenue + profit / marginal cost + total revenu / total cost + total revenue / total cost + marginal revenue /total cost + profit / marginal cost + marginal revenue

Blank 7 options: TC = TR / MC = TR / P = MC / Profit = MR - MC / Profit = TR-TC

Answer 1

Q	TC	TR	Profit	MC	MR
0	15	0	-15
1	30	20	-10	15	20
2	40	40	0	10	20
3	45	60	15	5	20
4	50	80	30	5	20
5	65	100	35	15	20
6	75	120	45	10	20
7	100	140	40	25	20

200 175 Total Revenue 150 125 Total Cost Profit 100 TOTAL COST AND REVENUE (Dollars) 75 50 . 25 j 0 -25 1 O 2 3 4 5 6 7 8

40 35 Marginal Revenue 30 25 Marginal Cost COSTS AND REVENUE (Dollars per teddy bear) 20 15 10 5 0 0 1 6 7 8 2 3 5 QUANTITY (Teddy bears)
Blanks-

1) 6

2) 10

3) less

4) 25

5) greater

6) MC=MR

7) P=MC