Question

show a diagram where society is better off with profitmax over rev max

Answer 1

Answer:

Profit max
MC=MR
Gives the greatest difference in total revenue and total costs. If MC<MR, then that unit improves the firm's profits because revenue outweighs the cost.
Rev Max
MR=0
When MR is +ve a firm increases it's revenue as output increases.
The key goal for a perfectly competitive firm in maximizing its profits is to calculate the optimal level of output at which its Marginal Cost (MC) = Market Price (P). As shown in the image above, the profit maximization point is where MC intersects with MR or P. If the above competitive firm produces a quantity exceeding qo, then MR and Po would be less than MC, the firm would incur an economic loss on the marginal unit, so the firm could increase its profits by decreasing its output until it reaches qo. If the above competitive firm produces a quantity fewer than qo, then MR and Po would be greater than MC, the firm would incur profit, but not to its maximum. Therefore, the firm could increase its profits by increasing its output until it reaches qo.