acques's profit is maximized when he produces , which is teddy bears. When he does this, the marginal cost of the last teddy bear he produces is than the price Jacques receives for each teddy bear he sells. The marginal cost of producing an additional teddy ear (that is, one more teddy bear than would maximize his profit) is S |, which is than the price Jacques receives for each teddy ear he sells. Therefore, Jacques's profit-maximizing quantity corresponds to the intersection of the curves. Because Jacques is a price taker, this last condition can also be written as

acques's profit is maximized when he produces , which is teddy bears. When he does this, the marginal cost of the last teddy bear he produces is than the price Jacques receives for each teddy bear he sells. The marginal cost of producing an additional teddy ear (that is, one more teddy bear than would maximize his profit) is S |, which is than the price Jacques receives for each teddy ear he sells. Therefore, Jacques's profit-maximizing quantity corresponds to the intersection of the curves. Because Jacques is a price taker, this last condition can also be written as

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.6IP

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