Question 11A

11. Profit maximization using total cost and total revenue curves Suppose Alyssa runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a competitive market, and the market price is $25 per teddy bear. The following graph shows Alyssa's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for teddy bears quantities zero through seven (inclusive) that Alyssa produces. 200 O 175 Total Revenue 150 Total Cost A 125 Profit 100 TOTAL COST AND REVENUE (Dollars) 75 50 25 0 25 2 3 4 5 6 7 8 QUANTITY (Teddy bears)Calculate Alyssa 's marginal revenue and marginal cost for the rst seven teddy bears she 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 at each quantity. /'\\ (PI 40 O (73' 35 - g Marginal Revenue > E 30 - 9 El 5 D. E 25 _ Marginal Cost 6 Q m 20 - 3 2 Lu > 15 m at 9