Consider the following graph
I read from CFA L1 notes that “At any output above the quantity where MR=MC, the firm will be generating losses on its marginal production and will maximize profits by reducing output to where MR=MC.” But now consider this:
Q′ is an output level above the one at which MC=MR. Shouldn’t the yellow region represent a positive economic profit in this case? I can understand that at any output level above the one at which ATC=MR, the firm would start making losses. But isn’t the quote above incorrect, or am I missing something? Sure, you might be making a suboptimal profit at output = Q’, but you’re certainly not making an outright loss.