What determines a monopolist's profit-maximizing quantity of output?

In the context of a monopolist operating in a market, the profit-maximizing quantity of output is determined by the intersection of the marginal-revenue curve and the marginal-cost curve. This is because a monopolist has the ability to set prices and thus faces a downward-sloping demand curve.

To maximize profit, a monopolist will continue to produce additional units of output up until the point where the revenue gained from selling one more unit (marginal revenue) equals the cost of producing that additional unit (marginal cost). If marginal revenue exceeds marginal cost, the firm can increase profit by producing more. Conversely, if marginal cost exceeds marginal revenue, the firm should reduce output to maximize profit. Therefore, the equilibrium point established by the intersection of these two curves directly indicates the optimal production level for the monopolist.

While the intersection of supply and demand curves is pertinent in competitive markets, it does not apply to monopolies that face less competition. The total cost of production and the average cost curve provide insights into overall cost structure but do not directly factor into the quantity decision for profit maximization in this particular scenario. Hence, focusing on the marginal analysis through the interaction of marginal revenue and marginal cost accurately identifies the profit-maximizing output