Profit maximization for a competitive firm
Move the quantity slider to see how the profit rectangle and total profit change. Adjust the quantity and market price to see how the profit rectangle and total-profit curve change. The profit-maximizing output is where P = MC.
Q = 6.0
0.514
P = 2.00
1.003.00
Optimal quantity (P = MC)8.00
AC
MC
Total profit
MC(Q) = Q/4
AC(Q) = 4/Q + Q/8
π(Q) = P×Q − 4 − Q²/8
Cost curves and economic profit
MCACPriceProfitLoss
The shaded rectangle is Q × [P − AC(Q)]. If AC exceeds P, the shaded area shows a loss.
Total economic profit
The moving purple dot gives profit at the chosen quantity; the green dot marks the profit-maximizing output, which changes with price.