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Larry’s profit is maximized when he produces shirts. When he does this, the marginal cost of the last shirt he

Larry’s profit is maximized when he produces shirts. When he does this, the marginal cost of the last shirt he produces is $ , which is than the price Larry receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than would maximize his profit) is $ , which is than the price Larry receives for each shirt he sells. Therefore, Larry’s profit-maximizing quantity corresponds to the intersection of the curves. Because Larry is a price taker, this last condition can also be written as .

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