The profit-maximizing output is the level of production at which a firm earns the highest possible profit. It occurs when marginal revenue (MR) equals marginal cost (MC).
Marginal Revenue (MR): Marginal revenue refers to the additional revenue earned from selling one more unit of a good or service.
Marginal Cost (MC): Marginal cost refers to the additional cost incurred from producing one more unit of a good or service.
Allocative Efficiency: Allocative efficiency occurs when resources are allocated in such a way that society's welfare is maximized, meaning that resources are used to produce goods and services that people value the most.
AP Microeconomics - 4.2 Monopolies
In a monopoly graph, where is the profit-maximizing output determined?
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