4% Dashboard - Antelope Valley C: X ey MindTap - Cengage Leaming [ R CENGAGE | MINDTAP Qs b4 Homework (Ch 08) 2. Marginal analysis and profit maximization Suppoese Becky gives haircuts on Saturdays to make extra meney. She is the only person in town cutting hair on Saturdays and therefore has some market power. Assume that she does not incur fixed costs, and the only significant variable cost to Becky is her time. As she gives more haircuts, m @ > Becky 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. Becky's clients are a varied group willing to pay between $20.00 and $30.00 for a haircut. Assume that Becky cannot price discriminate, i.e., charge =] different clients different prices. If Becky charges $30.00 per haircut, she will have one client per week; if she charges $27.50, she will have two; if she charges $25.00, three, and so forth. The following table contains data on the revenues and costs of Becky's haircut business as a function of her price-quantity choice. (The costs are based on the value of Becky's alternative activities, in dollar terms. For example, the total cost of the first haircut is $5the value Becky places on reading the newspaper after breakfast.) * Fill in the missing cells of the table and then use them to answer the questions that foliow. i Output Price Total Revenue Marginal Revenue Total Cost Marginal Cost Profit (Haircuts per (Dollars per (Dollars per (Dollars per (Dollars per (Dollars per (Dollars per week) haircut) week) haircut) week) haircut) week) o 0 0 o 0 30.00 5.00 1 30.00 30.00 5.00 25.00 25.00 5.00 2 27.50 55.00 10.00 45.00 20.00 10.00 [4 3 25.00 75.00 \\:I 20.00 :I 55.00 10.00 30.00 5 20.00 100.00 70.00 30.00 On the following graph, use the blue peints (circle symbol) to plot Becky'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 left to right, starting with zero haircuts and ending with five. Line segments will automatically connect the points. 100 week) v Dashboard - Antelope Valley Cc x | Homework (Ch 08) MindTap - Cengage Learning X C 26 ng.cengage.com/staticb/ui/evo/index.html? deploymentld=5839622340537210505082758348&eISBN=9781337111560&id=1995945226&snapshotld=3812144& CENGAGE | MINDTAP Q Search this course ? Homework (Ch 08) X 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) A-Z to plot Becky's marginal cost (MC) curve for the first five haircuts. Be sure to plot from left to right and to plot between integers. For example, if Becky's marginal cost of increasing her production from one haircut to two haircuts is x, then you would plot a point at (1.5, x). Line segments will automatically connect the points. 30 bongo 25 Marginal Revenue 20 Marginal Cost PRICE AND COST (Dollars per haircut) At 10 5 $20.00 $22.50 O QUANTITY OF OUTPUT (Haircuts per week) $25.00 $27.50 $30.00 Becky maximizes her profit by serving per week and charging per haircut. If Becky gave more haircuts than her optimal quantity of haircuts, which of the following statements would be true? Check all that apply. O Becky's profit (total revenue minus total cost) would decline. Becky's marginal revenue would be less than her marginal cost.MindTap - Cengage Leaming CENGAGE | MINDTAP Q s b4 Homework (Ch 08) 1, 1 30.00 30.00 5.00 25.00 25.00 5.00 2 27.50 55.00 10.00 45.00 20.00 10.00 (2] 3 25.00 75.00 ) 20.00 ) 55.00 10.00 30.00 = 5 20.00 100.00 70.00 30.00 \\g 0On the following graph, use the blue peints (circle symbol) to plot Becky's total revenue curve, use the erange points (square symbol) to plot her total cost curve, and use the purple points (diamond symbel) to plot her profit curve. Be sure to graph from left te right, starting with zero haircuts and j=1] ending with five. Line segments will automatically connect the points. o) @ 100 o Total Revenue @ o e 1 Total Cost