The graph below shows the demand curve and cost data for a firm operating as a monopolist.
The blue line shows:
Marginal Revenue
The demand curve is downward sloping. The marginal Revenue curve has half of the slope of the demand curve. Marginal costs typically increase with quantity.
The red line shows:
Demand Curve
The demand curve is downward sloping. The Marginal Revenue curve has half of the slope of the demand curve. Marginal costs typically increase with quantity.
The black line shows:
Marginal Costs
The demand curve is downward sloping. The Marginal Revenue curve has half of the slope of the demand curve. Marginal costs typically increase with quantity.
The profit maximizing quantity for this monopolist is:
`20`
Profit maximizing quantity is where MC = MR.
What price will the monopolist set in order to maximize profits (or minimize losses)?
`20`
First, find profit maximizing quantity (MC = MR), then trace that all the way up to the demand curve to find the price.