Marginal Cost Curve Intersecting the Demand Curve at 2 Points

Let's take a look, to the right, at a firm's demand curve which is intersected at 2 points by the marginal cost curve . We've learned that the profit maximizing level of output is where MC = P, but here we have 2 points from which to choose.

In deciding whether to produce at 10 (Q₁) or 25 (Q₂), we can look at the added profit of producing the 10th through the 25th unit (or said another way, the forgone profits of not producing the extra quantity). As we have learned, the forgone profit is equal to the added revenue minus the added costs.