A price-taking firm chooses one thing: how much to produce. Find the rule, then read profit or loss off the graph.
Jump to a state:
Step 1 — Output
Produce where MC = price (marginal revenue)
Step 2 — Result
Profit or loss = (price − ATC) × output
Marginal cost (MC)
Average total cost (ATC)
Price = MR
Profit
Loss
Price = $65 | Output q* = 7.2
TR = $466 TC = $300
Profit = +$165
the firm takes this as given; it cannot set its own price
← lower price | higher price →
set automatically where MC = price
← less output | more output →
Work through the two steps using the buttons above the graph.
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