Microeconomics › Section I · Monopoly › Topic I.2
How a monopoly chooses output and price
Unlike a competitive firm, a monopolist faces the whole market's demand curve alone, and that one fact changes its arithmetic. Selling more means cutting the price on every unit, so extra output earns less than the price suggests - and the profit-maximising monopoly ends up smaller and dearer than the competition it replaced.
In this topic
- Facing the whole demand curve
- Why marginal revenue falls below price
- Worked example: marginal revenue, step by step
- The monopolist's two-step rule
- Worked example: the monopoly solution
- The deadweight loss of monopoly
- No supply curve for a monopolist
- Price discrimination: charging by willingness to pay
- Common mistakes to avoid
- Key takeaways
This topic is part of Wuanberri Pro. Checking your access…