Profit maximizing output is achieved where MR = MC. This level of output is shown to the right as Q*. Remember that this must be profit maximizing; at any higher level
of output the added costs (MC) of the extra units would be greater than the added revenue (MR). At lower levels of output the firm wouldn't be producing some
units whose added revenue (MR) is greater than their added costs (MC), so the firm would be throwing away profit opportunities.
Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved