FIGURE 5 MONOPOLIST FIRM MAKING ECONOMIC LOSSES
Like perfectly competitive firms, monopolists may or may not be profitable in the short run, but in the long run, they must at least earn normal profits to remain in business. The monopolist shown here maximizes profits (minimizes losses) by producing at point e, selling 80 units of output at $25 each. Price is lower than average total cost, so the monopolist suffers the loss indicated by the shaded area. Because price still exceeds average variable cost (AVC), in the short run, the monopolist will minimize its losses by continuing to produce.