linguistic:voice_change
Profit maximization

The profit maximizing graph on the right side of the page represents optimal production quantity when both marginal cost and the marginal profit line intercepts. The black line represents the intersection where the profits are the greatest (marginal revenue = marginal cost). The left side of the black vertical line marked as "profit-maximising quantity" is where the marginal revenue is larger than marginal cost. If a firm sets its production on the left side of the graph and decides to increase the output, the additional revenue per output obtained will exceed the additional cost per output. From the "profit maximizing graph", we could observe that the revenue covers both bar A and B, meanwhile the cost only covers B. Of course A+B earns you a profit but the increase in output to the point of MR=MC yields extra profit that can cover the revenue for the missing A. The firm is recommended to increase output to reach (Theory and Applications of Microeconomics, 2012).