FIGURE 3 MONOPOLIST EARNING ECONOMIC PROFITS
imageProfit-maximizing output is found for monopolists, as for competitive firms, at the point where MR = MC. In this figure, marginal revenue equals marginal cost at point e, where output is 120 units. These 120 units are sold for $30 each (point a). Profit is equal to average profit per unit times units sold: Profit = (P – ATC) × Q = ($30 – $22) × 120 = $8 × 120 = $960. The shaded area represents profit.