3. Profit maximization using total cost and total revenue curves Suppose Iyana operates a handicraft popup retail shop that sells phone cases. Assume a perfectly competitive market structure for phone cases with a market price equal to $20 per phone case. 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 phone cases for quantities zero through seven (including zero and seven ) that Iyana produces; 200 + 175 3 Total Revenue '25 150 3 ToiaICosl A E 125 :i E Prot := 1m: LU o: E 75 a: E Q 50 o J i5 25 O ._ n 25 o 1 2 3 4 5 a r 3 QUANTITY (Phone cases} Calculate Iyana's marginal revenue and marginal cost for the first seven phone cases 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 -O 25 Marginal Cost 20 COSTS AND REVENUE (Dollars per phone case) 15 10 0 2 3 4 5 6 7 QUANTITY (Phone cases)Iyana's profit is maximized when they produce a total of phone cases. At this quantity, the marginal cost of the final phone case they produce is $ an amount than the price received for each phone case they sell. At this point, the marginal cost of producing one more phone case (the first phone case beyond the profit maximizing quantity) is | $ , an amount than the price received for each phone case 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 toIyana's prot is maximized when they produce a total of phone cases. At this quantity, the marginal cost of the final phone case they produce is , an amount V than the price received for each phone case they sell. At this point, the marginal cost of producing one more - ond the profit maximizing quantity} is- , an amount V than the price received for each phone greater phone case [the first pho case they sell. Therefore, ofitmaximizing quantity occurs at the point of intersection between the V curves. Because Ivana is a price taker, the previous condition is equivalent to V greater Iyana's profit is maximized when they produce a total of phone cases. At this quantity, th cost of the final phone case they produce less is $ an amount than the price received for each phone case they sell. At the e marginal cost of producing one more phone case (the first phone case beyond the profit maximizing quantity) is |$ an amount than the price received for each phone case 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 tomarginal cost and marginal revenue total revenue and prot ne 68588) total cost and total revenue total cost and prot roduce a total of \\:| phone cases. At this quantity, the marginal cost of the final phone case thevr produce total cost and marginal revenue than the price received for each phone case they sell. At this point. the marginal cost of producing one more d the profit maximizing quantity} is , an amount V than the price received for each phone maximizing quantity occurs at the point of intersection between the marginal cost and total revenue v curves. Because Ivana is a price taker, the previous condition is equivalent to V 0 2 3 4 5 6 7 8 QUANTITY (Phone cases) MC = TR TC = TR Iyana's profit is maximized when they produce a total of phone cases. At this quantity, the marginal cost of the fina P = MC e is $ an amount than the price received for each phone case they sell. At this point, the marginal cost Profit = MR - MC phone case (the first phone case beyond the profit maximizing quantity) is | $ , an amount than the price e Profit = TR - TO case 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