increases profit. At the quantity
Q2,
chi flat iron discount, marginal cost MC2 is above
marginal revenue MR2 ,
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reducing production increases
profit. The profit-maximizing
Q1 QMAX Q2
quantity QMAX is found where the 0 Quantity
horizontal price line intersects the
marginal-cost curve.
crosses the average-total-cost curve at the minimum of average total cost. The fig-
ure also shows a horizontal line at the market price (P). The price line is horizontal
because the firm is a price taker: The price of the firm's output is the same regard-
less of the quantity that the firm decides to produce. Keep in mind that,
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