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Profit Maximization Finder

Run the Profit Maximization Finder MicroSim Fullscreen
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About This MicroSim

This MicroSim teaches the most important rule in microeconomics: a firm maximizes profit by producing where marginal revenue (MR) equals marginal cost (MC). Students can adjust both quantity and price to see how revenue, cost, and profit change. The green and red shaded areas show where each additional unit adds to or subtracts from profit, making it visually clear why producing beyond MR = MC destroys value.

How to Use

  1. Adjust the Quantity slider (Q) to change how many units the firm produces. Watch the blue dashed line move and the profit calculation update.
  2. Adjust the Price slider (P) to set the market price, which equals marginal revenue for a competitive firm (the green horizontal MR line).
  3. Read the guidance messages on the right panel: the simulation tells you whether MR > MC (produce more), MC > MR (producing too much), or MR approximately equals MC (maximum profit achieved).
  4. Click "Find Optimal" to automatically animate the quantity slider to the profit-maximizing output level.
  5. Click "Reset" to return to default values.

Iframe Embed Code

You can add this MicroSim to any web page by adding this to your HTML:

<iframe src="https://dmccreary.github.io/economics-course/sims/profit-maximization-finder/main.html"
        height="477px"
        width="100%"
        scrolling="no"></iframe>

Lesson Plan

Grade Level

9-12 (High School Economics)

Duration

10-15 minutes

Prerequisites

  • Understanding of marginal cost and marginal revenue
  • Familiarity with the concept of profit (revenue minus cost)

Activities

  1. Exploration (5 min): Set the price to $20. Slowly increase quantity from 0 to 60. Record the profit at Q=10, Q=20, Q=30, Q=40, and Q=50. At which quantity is profit highest?
  2. Guided Practice (5 min): Click "Find Optimal" at three different prices ($15, $25, $35). Record the optimal quantity for each. How does the profit-maximizing quantity relate to the price?
  3. Assessment (5 min): Set the price to $25 and quantity to 50 (above optimal). Explain why the red shaded area shows that the firm is losing money on those extra units even though the total profit might still be positive.

Assessment

  • Students can state the MR = MC rule and explain why it maximizes profit
  • Students can use the simulation to find the profit-maximizing quantity at a given price
  • Students can explain why producing beyond the optimal quantity reduces profit

References

  1. Profit maximization - Wikipedia - Overview of the MR = MC rule and its derivation.
  2. Marginal Revenue and Marginal Cost - Investopedia - Explanation of how firms use MR and MC to make production decisions.
  3. Profit Maximization - Khan Academy - Video lessons on the profit maximization rule for competitive firms.