Final answer:
Firms should produce up to the point where marginal revenue equals marginal cost to maximize profits. Even if profits seem constant over a range of outputs, producing beyond the MR = MC point will reduce profits. The firm should target the output level where MR = MC for optimal results.
Step-by-step explanation:
When firms analyze their production decisions, they focus on the relationship between marginal revenue (MR) and marginal cost (MC). The principle that firms should continue producing as long as MR exceeds MC is central to profit maximization. However, there may appear to be a range where profits are maximized, such as between 70 and 80 units in the example provided. The key point to understand is that producing where MR < MC leads to reduced economic profits. Even if profit levels at 70 units and 80 units seem the same, expanding production beyond where MR = MC will decrease profits. Therefore, the correct level of output for the firm to target is where MR exactly equals MC, which in this case is at 80 units of output.