University of Dayton

Profit is maximized by producing the level of output at which marginal revenue, MR, equals marginal cost, MC. That is: MR = MC. 3. Figure 11.3 shows the level of output where MR = MC for the sweater making firm. These two curves intersect because MR is constant as output increases and MC rises as output increases. a) If MR > MC, economic profit increases if the firm increases output. b) If MR ... ................
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