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A profit-seeking supplier will be willing to produce where marginal costs equal marginal revenue. This intersection is critical because it indicates the quantity of goods that maximizes profit. When the marginal cost of producing one additional unit is equal to the marginal revenue gained from selling that unit, the supplier has no incentive to either increase or decrease production.

Producing beyond this point would mean the cost of producing an additional unit exceeds the revenue earned from its sale, resulting in diminished profits. Conversely, producing below this point means the supplier is missing out on potential revenue that exceeds the costs.

This principle forms a foundational concept in economics, specifically within the theory of supply and demand, implying that the firm is optimizing its production to ensure maximum profitability in the competitive market. Understanding this relationship assists suppliers in making informed production decisions.