2. Marginal analysis and profit maximization Suppose Kristen gives haircuts on Saturdays to make extra money. She is the only person in town cutting hair on Saturdays and therefore has some market power. Assume that she does not incur xed costs, and the only significant variable cost to Kristen is her time. As she gives more haircuts, Kristen must increasingly forgo other valuable Saturday activities. For example, if she gives one haircut, she forgoes reading the paper after breakfast. If she gives two haircuts, she gives up reading the paper and sleeping an extra half-hour. Kristen's clienis are a varied group willing to pay between $16.00 and $28.00 for a haircut. Assume that Kristen cannot price discriminate, i.e., charge different clients different prices. If Kristen charges $28.00 per haircut, she will have one client per week; if she charges $24.00, she will have two; if she charges $20.00, three, and so forth. The following table contains data on the revenues and costs of Kristen's haircut business as a function of her pricequantity choice. (The cosi: are based on the value of Kristen's alternative activities, in dollar terms. For example, the total cost of the first haircut is $4the value Kristen places on reading the newspaper after breakfast.) Fill in the missing cells of the table and then use them to answer the questions that follow. Total Marginal Marginal Output Price Revenue Reven ue Total Cost Cost Profit (Dollars (Dollars (Dollars (Dollars (Haircuts per (Dollars per ( Dollars per per per week) haircut) per week) haircut) per week) haircut) week) 0 0 0 0 28 .00 4.00 1 28.00 28.00 4.00 24.00 20 .00 8.00 2 24.00 48.00 12.00 36.00 1 2.00 8.00 3 20.00 60.00 20.00 40.00 4 18 .00 36. 00 8.00 20. 00 5 16.00 80.00 56.00 24.00 0n the following graph, use the blue points (circle symbol) to plot Kristen's total revenue curve, use the orange points (square symbol) to plot her total cost curve, and use the purple points (diamond symbol) to plot her profit curve. Be sure to graph from le to right, starting with zero haircuts and ending with ve. Line segments will automatically connect the points. Total Revenue Total Cost TOTAL REVENUE, TOTAL COST, AND PROFIT (Dollars per week) Profit QUANTITY OF OUTPUT ( Haircuts per week) On the following graph, use the blue points (circle symbol) to plot her marginal revenue (MR) curve, and then use the orange points (square symbol) to plot Kristen's marginal cost (MC) curve for the first five haircuts. Be sure to plot from left to right and to plot between integers. Fo example, if Kristen's marginal cost of increasing her production from one haircut to two haircuts is