All Subjects



AP Micro



Unit 3

3.5 Profit Maximization

1 min readnovember 15, 2020

Jeanne Stansak


Caroline Koffke

AP Microeconomics 💵

Bookmarked 2k • 79 resources
See Units


In economics, we refer to the profit-maximizing point as the quantity where marginal revenue (MR) equals marginal cost (MC). When we produce at this quantity, the costs of producing the last unit of output equals the revenue gained when selling it.
In the tables below, you can see that at 3 units, MR = MC ($7 = $7). This would be considered the profit maximization point for this firm. The firm will not produce a quantity lower than 3 because they would be producing a quantity where MR > MC, which means that the firm has the potential to earn more revenue per unit and is not maximizing its profits. They would also not produce above the quantity of 3 because if they did they would be producing at a point where MC > MR, which means the additional cost of producing each additional unit is more than the revenue it earns for the firm, incurring a loss.
Revenue for Firm B
Costs for Firm B

Was this guide helpful?

Join us on Discord
Thousands of students are studying with us for the AP Microeconomics exam.
join now
Hours Logo
Studying with Hours = the ultimate focus mode
Start a free study session
🔍 Are you ready for college apps?
Take this quiz and find out!
Start Quiz
Browse Study Guides By Unit
📝Exam Skills: FRQ/MCQ
💸Unit 1: Basic Economic Concepts
📈Unit 2: Supply and Demand
⚙️Unit 3: Production, Cost, and the Perfect Competition Model
📊Unit 4: Imperfect Competition
💰Unit 5: Factor Markets
🏛Unit 6: Market Failure and Role of Government
FREE AP micro Survival Pack + Cram Chart PDF
Sign up now for instant access to 2 amazing downloads to help you get a 5
Join us on Discord
Thousands of students are studying with us for the AP Microeconomics exam.
join now
💪🏽 Are you ready for the AP Micro exam?
Take this quiz for a progress check on what you’ve learned this year and get a personalized study plan to grab that 5!