Why does Marginal revenue have to equal marginal cost to maximize profit?

Question

Hello

The title says it all I guess? In theoretical economics, marginal cost has to equal marginal revenue in order to maximize profit. But this intuitively doesnt make sense to me Because that would just mean you’d have a profit of 0.

Is this somehow only applicable for monopolies?

Could someone clarify this reasoning please?

In: 2

Answer 1

the marginal cost refers to the *additional* cost of producing that last unit when compared to the previous one, not the total cost of producing said unit. the cost per unit is still below the revenue per unit.