9781118041581

FIGURE 2.8

Marginal Revenue and

Marginal Cost

In part (a), total profit

is shown as the

difference between

total revenue and total

cost. In part (b), the

firm’s optimal output

occurs where the

marginal revenue and

marginal cost curves

intersect.

0246 8

200

100

0

–100

–200

Quantity (Lots)

400

300

200

100

0

–100

0246 8

Total Revenue, Cost, and Profit (Thousands of Dollars)

Total cost

Revenue

Profit

Marginal cost

Marginal profit

Marginal revenue

Marginal Revenue and Cost (Thousands of Dollars)

(a)

(b)

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