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Unformatted text preview: 2 11 - 2 The Market Demand for Wheat versus the Demand or One Farmers Wheat Dont Confuse the Demand Curve for Farmer Douglass Wheat with the Market Demand Curve for Wheat Profit Maximization Profits are maximized when marginal revenue equals marginal cost. Calculus Intuition: additional revenue exceeds additional costs, firm should increase output. What is Marginal Revenue? Produce where P = MC 2 Perfect Comp q $ Price AVC MC ATC $ Q Demand Supply Profit = ( P x Q ) TC LEARNING OBJECTIVE 3 Q Q P ) ( = Q Profit Q TC ,...
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