Question

Teddy bears is a competitive market, and the market price is $20 per teddy bear 

The following graph shows Andrew's total cost curve. 

Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for teddy bears quantities zero through seven (inclusive) that Andrew produces. 

Calculate Andrew's marginal revenue and marginal cost for the first seven teddy bears he produces, 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 

 Andrew's profit is maximized when he produces _______  teddy bears. When he does this, the marginal cost of the last teddy bear he produces is _______ . which is _______  than the price Andrew receives for each teddy bear he sells. The marginal cost of producing an additional teddy bear (that is, one more teddy bear than would maximize his profit) is $_______ , which is _______  than the price Andrew receives for each teddy bear he sells. Therefore, Andrew's profit- maximizing quantity corresponds to the intersection of the _______  curves.

 Because Andrew is a price taker, this last condition can also be written as _______ .

Answer 1