Reference no: EM133400151

Profit maximization using total cost and total revenue curves Suppose Iyana operates a handicraft pop-up retail shop that sells cardigans. Assume a perfectly competitive market structure for cardigans with a market price equal to $25 per cardigan. The following graph shows Iyana's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for cardigans for quantities zero through seven (including zero and seven) that Iyana produces. Total Revenue Profit 0 1 2 3 4 5 6 7 8 200 175 150 125 100 75 50 25 0 -25 TOTAL COST AND REVENUE (Dollars) QUANTITY (Cardigans) Total Cost Calculate Iyana's marginal revenue and marginal cost for the first seven cardigans they produce, 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 at each quantity. Marginal Revenue Marginal Cost 0 1 2 3 4 5 6 7 8 40 35 30 25 20 15 10 5 0 COSTS AND REVENUE (Dollars per cardigan) QUANTITY (Cardigans) Iyana's profit is maximized when they produce a total of cardigans. At this quantity, the marginal cost.