(Solved): Suppose Rian operates a handicraft pop-up retail shop that sells cardigans. Assume a perfectly com ...

Suppose Rian operates a handicraft pop-up retail shop that sells cardigans. Assume a perfectly competitive market structure for cardigans with a market price equal to \( \$ 20 \) per cardigan. The following graph shows Rian'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 Rian produces. Calculate Rian's marginal revenue and marginal cost for the first seven cardigans they produce, and plot them on the following graph. Use the blue boints (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost at each quantity. Rian's profit is maximized when they produce a total of cardigans. At this quantity, the marginal cost of the final cardigan they produce is , an amount than the price received for each cardigan they sell. At this point, the marginal cost of producing one more cardigan (the first cardigan beyond the profit maximizing quantity) is, , an amount the price received for each cardigan chey sell. Therefore, Rian's profit-maximizing quantity occurs at the point of intersection between the curves. Because Rian is a price taker, the previous condition is equivalent to