Suppose Chris is a potter who makes mugs. His total costs depend on the number of mugs he makes each day, as shown in the accompanying table. $$\begin{array} { | c | c | }
\hline \text { Number d Mugs Per Day } & \text { Tatal Cast Per Day } \
\hline 0 & \$ 10 \
\hline 1 & \$ 14 \
\hline 2 & \$ 19 \
\hline 3 & \$ 25 \
\hline 4 & \$ 32 \
\hline 5 & \$ 40 \
\hline 6 & \$ 49 \
\hline
\end{array}$$
If the market for mugs is perfectly competitive, and mugs sell for $7.50 each, then Chris should make ________ mugs per day.

Question

Suppose Chris is a potter who makes mugs. His total costs depend on the number of mugs he makes each day, as shown in the accompanying table. $$\begin{array} { | c | c | } 
\hline \text { Number d Mugs Per Day } & \text { Tatal Cast Per Day } \
\hline 0 & \$ 10 \
\hline 1 & \$ 14 \
\hline 2 & \$ 19 \
\hline 3 & \$ 25 \
\hline 4 & \$ 32 \
\hline 5 & \$ 40 \
\hline 6 & \$ 49 \
\hline
\end{array}$$  
If the market for mugs is perfectly competitive, and mugs sell for $7.50 each, then Chris should make ________ mugs per day.

Quizplus · Accepted Answer

Chris should produce mugs up to the point where the marginal cost of producing an additional mug is equal to the market price of $7.50, as long as the marginal cost does not exceed the price. From the table, the marginal cost of producing the first mug is $4 ($14 - $10), the second is $5 ($19 - $14), the third is $6 ($25 - $19), the fourth is $7 ($32 - $25), the fifth is $8 ($40 - $32), and the sixth is $9 ($49 - $40). Therefore, Chris should produce 4 mugs, as producing the fifth mug would cost more ($8) than the market price ($7.50).

Suppose Chris Is a Potter Who Makes Mugs If the Market for Mugs Is Perfectly Competitive, and Mugs