Monopoly Profit Maximizing Analysis

Price Per
Unit
Demand
$8.00
$7.80
$7.60
$7.40
$7.20
$7.00
$6.80
$6.60
$6.40
$6.20
$6.00
$5.80
$5.60

Total
Revenue
$0.00
$7.80
$15.20
$22.20
$28.80
$35.00
$40.80
$46.20
$51.20
$55.80
$60.00
$63.80
$67.20

Total
Cost
10.00
14.00
17.50
20.75
23.80
26.70
29.50
32.25
35.10
38.30
42.70
48.70
57.70

Total
Profit
($10.00)
($6.20)
($2.30)
$1.45
$5.00
$8.30
$11.30
$13.95
$16.10
$17.50
$17.30
$15.10
$9.50

Average
Total
Marginal Marginal
Cost
Cost
Revenue
$0.00
$0.00
$0.00
$14.00
$4.00
$7.80
$8.75
$3.50
$7.40
$6.92
$3.25
$7.00
$5.95
$3.05
$6.60
$5.34
$2.90
$6.20
$4.92
$2.80
$5.80
$4.61
$2.75
$5.40
$4.39
$2.85
$5.00
$4.26
$3.20
$4.60
$4.27
$4.40
$4.20
$4.43
$6.00
$3.80
$4.81
$9.00
$3.40

Revenue - Cost Comparison

Total Revenue

Cosy/Revenue

Total
Output
Units
0
1
2
3
4
5
6
7
8
9
10
11
12

Total Cost

$80.00
$70.00
$60.00
$50.00
$40.00
$30.00
$20.00
$10.00
$0.00
1

10

11

12

13

Output

Monopoly Profit Determination

Price Per Unit Demand

Average Total Cost

Marginal Cost

Marginal Revenue

Price

$15.00
$10.00
$5.00
$0.00
1

OutPut Units

10

11

12

13

1) MC = MR is a profit maximizing production level for the monopoly because

the monopolist charges the highest amount the consumer is willing to pay at
that output.
2) Where ever MC = MR and the price alines with that output.
3) A monopoly is inefficient because prices are higher than marginal cost and
average total cost.