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- A monopoly maximizes profit by producing the quantity at which MR = MC, just like in Profit Maximization Rule, then uses the demand curve to find the price that will induce consumers to buy that quantity.
- For a competitive firm, P = MR = MC (so as to compete with other firms in terms of price). For a monopoly firm, P > MR = MC (they can set the price they want)
- As P > MC, this high price makes monopoly undesirable for consumers but desirable for the firmβs owners.
- A monopolist will receive economic profits as long as P > ATC
- profit maximization graph for monopoly
- monopoly profit graph
- example of a firm from monopoly to competitive
