suppose antonio runs a small business that manufactures shirts. assume that the market for shirts is a…

suppose antonio runs a small business that manufactures shirts. assume that the market for shirts is a perfectly competitive market, and the market price is $25 per shirt. the following graph shows antonios total cost curve. use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven shirts that antonio produces, including zero shirts.

suppose antonio runs a small business that manufactures shirts. assume that the market for shirts is a perfectly competitive market, and the market price is $25 per shirt. the following graph shows antonios total cost curve. use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven shirts that antonio produces, including zero shirts.

Answer

Explanation:

Step1: Calculate total - revenue formula

The formula for total revenue ($TR$) in a perfectly - competitive market is $TR = P\times Q$, where $P$ is the price and $Q$ is the quantity. Given $P = 25$, so $TR=25Q$.

Step2: Calculate profit formula

The formula for profit ($\pi$) is $\pi=TR - TC$, where $TC$ is the total cost. We need to read the total - cost values from the given graph for each quantity $Q$ and then subtract them from the total - revenue values calculated in Step 1. For $Q = 0$: $TR=25\times0 = 0$ Read $TC$ from the graph at $Q = 0$. Let's assume $TC(0)=25$ (from the intercept of the total - cost curve on the vertical axis). Then $\pi=0 - 25=- 25$. For $Q = 1$: $TR = 25\times1=25$ Read $TC$ from the graph at $Q = 1$. Let's assume $TC(1)=40$ (estimated from the graph). Then $\pi=25 - 40=-15$. For $Q = 2$: $TR=25\times2 = 50$ Read $TC$ from the graph at $Q = 2$. Let's assume $TC(2)=50$ (estimated from the graph). Then $\pi=50 - 50 = 0$. For $Q = 3$: $TR=25\times3=75$ Read $TC$ from the graph at $Q = 3$. Let's assume $TC(3)=60$ (estimated from the graph). Then $\pi=75 - 60 = 15$. For $Q = 4$: $TR=25\times4 = 100$ Read $TC$ from the graph at $Q = 4$. Let's assume $TC(4)=75$ (estimated from the graph). Then $\pi=100 - 75 = 25$. For $Q = 5$: $TR=25\times5=125$ Read $TC$ from the graph at $Q = 5$. Let's assume $TC(5)=100$ (estimated from the graph). Then $\pi=125 - 100 = 25$. For $Q = 6$: $TR=25\times6 = 150$ Read $TC$ from the graph at $Q = 6$. Let's assume $TC(6)=125$ (estimated from the graph). Then $\pi=150 - 125 = 25$. For $Q = 7$: $TR=25\times7=175$ Read $TC$ from the graph at $Q = 7$. Let's assume $TC(7)=150$ (estimated from the graph). Then $\pi=175 - 150 = 25$.

We then plot the points:

  • For total revenue: The points are $(0,0),(1,25),(2,50),(3,75),(4,100),(5,125),(6,150),(7,175)$ (blue points, circle symbol).
  • For profit: The points are $(0, - 25),(1,-15),(2,0),(3,15),(4,25),(5,25),(6,25),(7,25)$ (green points, triangle symbol).

Answer:

The blue points (circle symbol) for total revenue are: $(0,0),(1,25),(2,50),(3,75),(4,100),(5,125),(6,150),(7,175)$. The green points (triangle symbol) for profit are: $(0, - 25),(1,-15),(2,0),(3,15),(4,25),(5,25),(6,25),(7,25)$.