The level of output that maximizes a monopoly's profit is when the marginal cost equals the marginal revenue.
How Is Profit Maximized in a Monopolistic Market?
- In a monopolistic market, a single company produces a single well.
- A monopolist firm's propensity to maximize profits is one of its defining characteristics.
- Because there is no competition in a monopolistic market, the monopolist has complete control over the price and quantity requested.
- The level of output where a monopoly's profit is maximized occurs when the marginal cost and marginal income are equal.
- On the other hand, in a market where there is competition, rivals tend to push down the marginal cost and reduce profitability.
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