Monopolist's Profit Maximization

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A monopolist maximizes profit when marginal cost equals marginal revenue (). One might think that a monopolist has the pricing power to decrease quantity and increase price in order to increase profit. However, that is not true. This Demonstration shows that once a monopolist deviates from the condition, profit decreases. You can mouseover a curve to see its definition. You can also see the price and cost per unit by mousing over the dashed horizontal lines.

Contributed by: Samuel G. Chen (March 2011)
Open content licensed under CC BY-NC-SA


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