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# Economic profit for a monopoly

AP.MICRO:
PRD‑3 (EU)
,
PRD‑3.B (LO)
,
PRD‑3.B.6 (EK)
Learn about how to represent a monopoly market graphically in this video. Topics covered include the profit-maximizing quantity, pricing decisions, and deadweight loss associated with monopolies.

## Want to join the conversation?

• Please, when you draw the white line of marginal revenue you mention other videos. Which videos are these especifically? Thank you.
• He's referring to the videos on perfect competition. In that situation, every firm has to take the market price. If you charge more, consumers will go to your competitor. If you charge less, you're making less money than you could be. Therefore, demand is linear at the market price (you will sell for the same price regardless of quantity).

This means that the revenue that you earn will always be the same for each additional unit that you sell. It will always be the market P because of elasticity in the market.

In the case of the monopolist, demand is not a horizontal line. People will buy more/less depending on the price that you charge. In other words, they are affected by the price level because there are no other competitors that they can buy from.

Here however, MR does not equal demand because price fluctuates with quantity. If we sell one more unit, we make the revenues from that unit minus the revenues lost by dropping our price to sell the marginal unit.

• Hi. Which video illustrate how MR curve goes down faster than Demand curve please?
• Why is the MC curve not equal to the D curve? I always thought the picture Sal drew was ment fot Monopolistic competition, and when there is Monopoly, MC = D, because the one and olny firm gains everything. Do I miss something?
• Demand is how much people are willing to buy given MC is akin to supply in that given a cost it tells you how much producers are willing to sell at that point.
(1 vote)
• Can someone explain intuitively why P>MC in a monopoly?
• Monopoly is profit-maximizing meaning that the quantity they would produce is the intersection of MR = MC, however as MR has a steeper slope than Demand, it happens that P( price of demand) is higher than MC
(1 vote)
• This is like math in a way
• i dont get it. in the previous video he said how a firm in an imperfect competition would stay at MR=MC even though people are willing to pay more. here hes saying that the firm would sell at the price above MR=MC. did i miss something?
• Do you always have deadweight loss for a monopoly?
(1 vote)
• Yeah as long as they produce where MR=MC and there is no government intervention