Final answer:
The profit-maximizing level of output for a monopoly is determined by the point at which marginal revenue (MR) equals marginal cost (MC), which is represented by the equation MR = MC. In this scenario, Redstone should produce 80 units to maximize profit margin.
Step-by-step explanation:
The profit-maximizing level of output for a monopoly is determined by the point at which marginal revenue (MR) equals marginal cost (MC), which is represented by the equation MR = MC. In the given scenario, Table 8.1 shows that maximum profit occurs at any output level between 70 and 80 units of output, but the point at which MR = MC occurs at 80 units. This slight discrepancy can be explained by the fact that as long as MR > MC, a profit-seeking firm should keep expanding production. However, expanding production into the zone where MR < MC reduces economic profits. Therefore, the level of output that Redstone should produce to maximize profit margin is 80 units.