FIGURE 7-1 The Price-Taking Firm’s Profit-Maximizing Quantity of Output
imageAt the profit-maximizing quantity of output, the market price is equal to marginal cost. It is located at the point where the marginal cost curve crosses the marginal revenue curve, which is a horizontal line at the market price. Here, the profit-maximizing point is at an output of 50 trees, the output quantity at point E.