11. 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 $20 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. 200 O 175 Total Revenue 150 Total Cost 125 Profit 100 TOTAL COST AND REVENUE (Dollars) 75 50 25 2 5 6 7 QUANTITY (Cardigans)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. 40 O 35 Marginal Revenue 30 25 Marginal Cost COSTS AND REVENUE (Dollars per cardigan) 20 15 10 5 2 5 QUANTITY (Cardigans) Iyana'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 than the price received for each cardigan 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