Cost and Revenue for Monopoly and Monopolistic Competition
This Demonstration shows the cost and revenue situation when an industry is controlled by a monopolist or a monopolistic competitor. You can change the fixed and marginal costs as well as the slope and intercept of the demand function. Variable cost is shown in light blue and profit or loss is in red. Fixed costs are shown in yellow as well as with vertical lines (i.e., for cases in which part of the fixed cost is obliterated by the red loss area). The graph label changes to match the following cases: (1) the firm earns a positive economic profit; (2) the firm earns zero economic profit; (3) the firm produces with a loss; (4) the firm is indifferent between shutting down and producing with a loss (i.e., the firm is just at the shutdown point); and (5) the firm should shut down. The scale on the vertical axis can also be controlled.