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Monopoly Profit Maximization

Monopoly Profit Maximization

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Published by Arman

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Categories:Business/Law
Published by: Arman on Oct 30, 2011
Copyright:Attribution Non-commercial

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05/25/2012

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Monopoly Profit Maximization
 
 A Model of Monopoly
How much should the monopolistic firmchoose to produce if it wants tomaximize profit?
 
The Monopolist’s Price andOutput Numerically
The first thing to remember is that
marginal revenue
is the change intotal revenue that occurs as a firmchanges its output.
TR=P x QTR=P x Q
MR = Change in Total Revenue/ change in outputMR = Change in Total Revenue/ change in output
Another way to say it is:Another way to say it is:how much does your Total Revenue changes as you increase output”how much does your Total Revenue changes as you increase output”

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