If Q = 700, we will have to set the price according to the demand curve at
This means that REVENUE will be PQ = ($ 1600) 700 = $1,120,000.
Note that revenue acutally increases as we expand output.
VARAIBLE COST will be MC x Q = $ 500 x 700 = $ 350,000.
OPERATING PROFIT will be PQ - VC or
$1,120,000 - $ 350,000 = $ 770,000
This is MUCH less than the profit level found at the optimum of 625 units of output.
The MR = MC rule seems to be working once again.