In a monopolistic market, a firm can only maximize profit by producing at a quantity where marginal cost is equal to marginal revenue, regardless of the price elasticity of demand for its product.

In a monopolistic market, a single firm has control over the entire supply of a product, allowing it to set prices. To maximize profit, this firm needs to produce at a level where its marginal cost, which is the cost of producing one more unit, equals its marginal revenue, the additional income from selling that unit. This is important because if the firm produces too much, costs will exceed the revenue gained from additional sales, leading to losses. For example, if a company makes toys and finds that producing 100 toys costs $1,000 and selling them brings in $1,200, it should check if producing the 101st toy would increase profits or not. Ultimately, this balance of marginal cost and marginal revenue is crucial for determining the best quantity to produce, regardless of how sensitive customers are to price changes.