In a monopolistic market, the profit-maximizing output level occurs where marginal revenue equals __________.

In a monopolistic market, the profit-maximizing output level occurs where marginal revenue equals marginal cost. Marginal revenue is the extra money a firm makes from selling one more unit of a product, while marginal cost is the extra cost of producing that additional unit. When a company produces up to the point where these two amounts are equal, it maximizes its profit because producing more would cost more than it earns, and producing less would mean losing potential profit. For example, if a toy company finds that making one more toy costs $10, and selling that toy brings in $10, it knows it’s at the right output level. This balance helps the company decide how many toys to produce to make the most money.