Sensitivity Analysis 49
FIGURE 2.9
Shifts in Marginal
Revenue and Marginal
Cost
Part (b) depicts an
increase in marginal
cost as an upward shift
in the marginal cost
curve. As a result, the
firm’s optimal output
level declines. Part (c)
shows an upward
(rightward) shift in
marginal revenue
resulting from an
increase in demand. As
a result, the firm’s
optimal output level
increases.
150
100
50
(a) Marginal Revenue and Cost (Thousands of Dollars)
3.3
Quantity (Lots)
MR = 170 – 40Q
MC = 38
150
100
50
(b) Marginal Revenue and Cost (Thousands of Dollars)
3.3
Quantity (Lots)
MR = 170 – 40Q
MC = 38
150
100
50
(c) Marginal Revenue and Cost (Thousands of Dollars)
3.3
Quantity (Lots)
MR = 190 – 40Q
MC = 38
MC = 46
3.1
3.8
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