A monopolist maximises profit by producing the quantity at which

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A monopolist maximizes profit when marginal revenue equals marginal cost. This is because selling one more unit at a certain price (marginal revenue) should bring in at least as much revenue as the additional cost of producing that unit (marginal cost). When marginal revenue is higher than marginal cost, the firm can increase profits by producing more; when marginal cost is higher than marginal revenue, the firm can increase profit by producing less. At the point where marginal revenue equals marginal cost, the firm is producing the optimal quantity that maximizes profit.

A Monopolist Maximises Profit by Producing the Quantity at Which