Combining revenue and cost curves
Now, some diagrammatical work. Let's combine the two examples developed in this section and the figures from the previous notes on costs. This gives us the data below.
|Total cost ($ 000)||100||110||125||145||170||200||235||275||320||370||425|
|Total revenue ($ 000)||0||100||180||240||280||300||300||280||240||180||100|
|Profit ($ 000)||-100||-10||55||90||110||100||65||15||-80||-190||-325|
|Marginal revenue ($ 000)||100||80||60||40||20||0||-20||-40||-60||-80|
|Marginal cost ($ 000)||10||15||20||25||30||35||40||45||50||55|
Now let's plot yet another graph. From the table above plot the marginal cost, marginal revenue and profit figures. You should get a graph looking like the figure below.
There is also a static version of the graph available.
See clearly that the profit is maximised when MC = MR. You can see this from the graph, but can confirm from the data that this is the case as well.