Tuesday, November 11, 2014

What does profit equal in a market monopoly?

In a monopoly, it is possible for a firm to make an economic profit.  This is because the firm can sell for a price that is higher than the marginal cost of making the good.


To find the profit in such a case, you take the difference between your total costs and your total revenue at each quantity produced.  The firm will choose to produce at the quantity where this difference is the highest.  At that quantity, it will make maximum profit.


You can follow the link I've provided to see graphs of how to figure profit.

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