Final answer:
A monopolist determines the profit-maximizing output level by producing at the point where marginal cost is equal to marginal revenue (option a) , which can typically be identified where the MR and MC curves intersect on a graph.
Step-by-step explanation:
A monopolist can identify the profit-maximizing level of output by ensuring it produces where marginal cost equals marginal revenue. This is the point at which the cost of producing one additional unit equals the revenue gained from selling that additional unit. While it could be tempting to think producing where total revenue is highest or total cost is lowest would be ideal, it is the margin - the difference between revenue and cost on the margin - that dictates profitability for a monopolist.
Thus, the correct answer to identifying the profit-maximizing level of output is by producing where marginal cost equals marginal revenue (option a). This rule of thumb simplifies the process of profit maximization without calculating the total revenue and total costs. It can easily be identified graphically where the MR and MC curves intersect, signifying the most efficient level of production for maximal profits.