In a monopoly market, a firm maximizes its profits when it produces at the level where __________ equals marginal cost.

In a monopoly market, a firm maximizes its profits when it produces at the level where marginal revenue equals marginal cost. Marginal revenue is the additional income that the firm earns from selling one more unit of its product, while marginal cost is the cost of producing that extra unit. When these two values are equal, it means that the firm is not losing money on the extra unit produced; instead, it is at the optimal point of production. For example, if a monopolist sells a toy for $10 and finds that producing one more toy costs $6, it will keep producing until the additional revenue from selling that toy equals $6. This balance helps the firm to maximize its overall profit by ensuring that it is not overspending on production.