Problem
Assume that a firm's marginal cost first falls, and then rises, as the level of output that it produces increases, and that the marginal cost curve crosses the firm's marginal revenue curve twice--from above at some low level of output and then from below at some higher level of output. Explain why a firm will maximize its profit if it produces the higher level of output at which the curves cross, but won't maximize profit by producing the lower level of output at which they cross.
Explain this in a way that people without prior knowledge can understand. This does notmean that they can immediately grasp it intuitively, but that sufficient information is provided, in a precise, orderly way, to allow them to work through the explanation.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.