production from 80 to 90, he would find that marginal costs from the increase in production are greater than

marginal revenues, and so profits would decline.

The profit-maximizing choice for a perfectly competitive firm will occur at the level of output where marginal

revenue is equal to marginal cost—that is, where MR = MC. This occurs at Q = 80 in the figure.

WORK IT OUT

Does Profit Maximization Occur at a Range of Output or a Specific Level of Output?
Table 8.1 shows that maximum profit occurs at any output level between 70 and 80 units of output. But MR = MC

occurs only at 80 units of output. How can we explain this slight discrepancy? As long as MR > MC, a profit-

seeking firm should keep expanding production. Expanding production into the zone where MR < MC reduces

economic profits. It’s true that profit is the same at Q = 70 and Q = 80, but it’s only when the firm goes beyond
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