The cost and revenue curves of different types of market (perfect competition, monopolistic competition, oligopoly or monopoly) are very different and confusing. But the point a producer will stop producing is the same.

Remember, regardless of the type of market, producer will always produce until the marginal cost (MC) = marginal revenue (MR). This means that they will maximize the profit, or at least minimize the loss.

Consider the following question:

If a market has a horizontal demand curve of $10 and the cost of a machine per day is $1000, how many machines will the factory employ given the following table?

Basically, MR is given already because for horizontal demand curve, D = MR =$10. What we need to find is the MC (i.e. costs needed per unit of additional output). The followings give the MC:

1 machine:      MC = $1000/ 150 = $6.67

2 machines:    MC = $1000/ (2×130 – 150) = $ 9.09

2 machines produce 130×2 = 260 units. And compared with only 1 machine, 260-150 = 110 additional units are produced. Therefore, MC cost is $1000/110.

Similarly,

3 machines:    MC = $1000/ (3×115 – 2×130) = $11.76

4 machines:    MC = $1000/ (4×100 – 3×115) = $18.18

Therefore, the producer will only employ 2 machines. This is because it has the highest MC< MR.