You are explaining to a colleague why you want to produce th…

Questions

Yоu аre explаining tо а cоlleague why you want to produce the quantity that sets MR equal to MC to maximize your profit. You colleague interrupts and asks why you want to do that. They point out that if you produce the quantity that sets MR equal to MC, that unit adds no profit, so your colleague continues that means you should produce the amount that has MR exceeding MC by the largest possible amount. Carefully explain to your colleague the error in their analysis. Also carefully explain why producing where MR=MC will maximize your profit.