Comparing monopoly and Competition For a competitive firm, price equals marginal cost >P=MR= MC o For a monopoly firm, price exceeds marginal cost >P>MR= MC
Comparing Monopoly and Competition • For a competitive firm, price equals marginal cost. ➢P = MR = MC • For a monopoly firm, price exceeds marginal cost. ➢P > MR = MC
A Monopoly's profit o Profit equals total revenue minus total costs Profit=TR-TC Profit=(TR/Q-TCQ)×Q Profit=(P-AtC)Q
A Monopoly’s Profit • Profit equals total revenue minus total costs. • Profit = TR - TC • Profit = (TR/Q - TC/Q) x Q • Profit = (P - ATC) x Q