Our economics school book states that the profits of a company are maximized when MC = P. However, I am having some trouble wrapping my head around that. For example, I have the following exercise:
The question is: If the equilibrium p is $P_E = 72$, (in which the product is sold), what quantity $Q$ will the company have to produce and sell in order to maximize its profit?
So, we get that the supply table is:
The answer is: it will have to produce and sell quantity of $Q_E = 450$. My questions are:
- Is this because of the equilibrium p, which is $P_E=72$ equals the $MC = 72$?
- If the equilibrium price was set as $P_E = 36$, then would the answer be $Q_E=400$?
- If the equilibrium price was, for example, $P_E=71$, then would I be able to answer just with this data?
Thanks for your time!!