11. Prot maximization using total cost and total revenue curves Suppose Yakov 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 pan. The following graph shows Yakov's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot prot for frying pans quantities zero through seven (inclusive) that Yakov produces. 200 175 '5\" Total Cost 125 100 75 SD 25 TOTAL COST AND REVENUE (Dollars) 0 1 2 3 4 5 6 7 8 QUANTITY (Frying pans) -0- Total Revenue * Prot Calculate Yakov's marginal revenue and marginal cost for the rst seven frying pans he 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. 40 -.- E' 35 CL Marginal Revenue U] E '_ 30 \"E -I- ll CI. E 25 Marginal Cost 3 9 Lu 20 :J z s M 15 D: D E 10 E 8 o 5 D I I I I I I u 1 2 3 4 5 6 7 8 QUANTITY (Frying pans) Yakov's prot is maximized when he produces frying pans. When he does this, the marginal cost of the last frying pan he produces is $ , which is V than the price Yakov receives for each frying pan he sells. The marginal cost of producing an additional frying pan (that is, one more frying pan than would maximize his prot) is sells. Therefore, Yakov's prot-maximizing quantity corresponds to the intersection of the Because Yakov is a price taker, this last condition can also be written as $ , which is v V than the price Yakov receives for each frying pan he v curves