Today I held the annual M&M’s competition with my A2 class. I use them to teach MC=MR also Minimum (loss) and Maximum (profit).
Profit is maximised at the rate of output where the positive difference between total revenues and total costs is the greatest – see graph above. Using marginal analysis, the perfectly competitive firm will produce at a rate of output where marginal revenue equals marginal cost. Marginal revenue, however, is equal to price. Therefore, the perfectly competitive firm produces at an output rate where marginal cost equals the price of output. Remember that the firm will make profits as long as the extra revenue brought in from selling the last unit of output(MR) is greater than the extra cost which is incurred in producing it (MC). Below are some Perfect Competition and Monopolistic Competition graphs created by my A2 class using M&M’s