(Solved): 11. Profit maximization using total cost and total revenue curves Suppose Sean runs a small busines ...

11. Profit maximization using total cost and total revenue curves Suppose Sean runs a small business that manufactures frying pans. Assume that the market for frying pans is a competitive market, and the market price is \( \$ 20 \) per frying pari. The following graph shows Sean's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for frying pans quantitiesazero through seven (inclusive) that Sean produces. Calculate Soan's marginal revenue and marginal cost for the first seven fryin's pans he produces, and plot them on the following graph. Uso the blue points (orcle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost at each quantity. Sean's proft is maximized when he produces _frying pans. When he does this, the marginal cost of the last fryine pan he produces is , which is than the price sean receives for each fryino pan he sells. The maroinal cost of produdng an additional frying pan (that is, one more frying pan than would maximize his profit) is which is than the price Sean receives for each frving pan he 'sells. Therefore, Sean's profit-maximizing quantity corresponds to the intersection of the curves. Because Sean is a price taker, this last condition can also be written as