MONOPOLY OUTPUT, TOTAL REVENUE AND TOTAL COST: A profit-maximizing monopoly firm produces output where the difference between total revenue and total cost (that is, economic profit) is the greatest. This total revenue and total cost approach to identifying profit-maximizing production can be accomplished using either a table of numbers of a set of curves. However, the end result is the same. Profit-maximizing production takes place at the quantity generating the greatest difference between total revenue and total cost. An added benefit of performing the analysis with curves, however, is the observation that profit-maximizing production occurs where the slopes of the total revenue and total cost curves are equal. And because slopes are marginals, this means that profit-maximizing production occurs where marginal revenue is equal to marginal cost. See also | monopoly | total revenue | total cost | profit maximization | quantity | output | profit | monopoly output, marginal revenue and marginal cost | short-run production |
