3. Profit maximization using total cost and total revenue curves Suppose Rian operates a handicraft pop-up retail shop that sells rompers. Assume a perfectly competitive market structure for rompers with a market price equal to $25 per romper. The following graph shows Rian's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for rompers for quantities zero through seven (including zero and seven) that Rian produces. @ 200 O 175 Total Revenue 150 Total Cost A 125 o Profit 100 75 50 25 TOTAL COST AND REVENUE (Dollars) 0 1 2 3 4 5 6 7 8 QUANTITY (Rompers) Calculate Rian's marginal revenue and marginal cost for the first seven rompers 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. Calculate Rian's marginal revenue and marginal cost for the first seven rompers they produce, and plot them on the following graph. Use the biue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost at each quantity. @ 40 o = 35 z Marginal Revenue E 2 30 o g Il % 25 Marginal Cost a w Y20 = w i Lo o z - 10 2 w Qo O 5 0 0 1 2 3 4 5 6 7 3 QUANTITY (Rompers) Rian's profit is maximized when they produce a total of \\:\\ rompers. At this quantity, the marginal cost of the final romper they produce is , an amount W than the price received for each romper they sell. At this point, the marginal cost of producing one more romper (the first romper beyond the profit maximizing quantity) is , an amount W than the price received for each romper they sell. Therefore, Rian's profit-maximizing quantity occurs at the point of intersection between the W curves. Because Rian is a price taker, the previous condition is equivalent to v