(Solved):   3. Profit maximization using total cost and total revenue curves Suppose Iyana operates ...

 

3. Profit maximization using total cost and total revenue curves Suppose Iyana operates a handicraft pop-up retail shop that sells phone cases. Assume a perfectly competitive market structure for phone cases with a market price equal to \( \$ 20 \) per phone case. 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 phone cases for quantities zero through seven (including zero and seven) that Iyana produces. Calculate Iyana's marginal revenue and marginal cost for the first seven phone cases 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. more phone case (the first phone case beyond the profit maximizing quantity) is, an amount the price reach phone case they sell. Therefore, Iyana's profit-maximizing quantity occurs at the point of intersection between the curves. Because Iyana is a price taker, the previous condition is equivalent to