Outcome: Revenue, Costs, Profit and Losses in Monopolies

What you’ll learn to do: calculate and graph a monopoly’s fixed, variable, average, marginal and total costs

We know that because a monopolist controls the market for a good or service, they get more say in how much they want to produce and what price to sell it at. In this outcome, you’ll see how they make those decisions.

Here are some of the specific things you’ll learn to do in this section:

  • Measure variable and total costs as the area under the average variable and average total cost curves
  • Calculate and graph the firm’s average, marginal and total revenues
  • Measure total revenues as the area under the average revenue curves
  • Determine the profit maximizing output level and price; calculate and graphically illustrate where marginal revenue equals marginal costs
  • Calculate and graphically illustrate profit and losses for a monopolist


The learning activities for this section include the following:

  • Reading: Choosing Output and Price
  • Reading: Illustrating Monopoly Profits
  • Self Check: Revenue, Costs, Profit and Losses in Monopolies

Take time to review and reflect on each of these activities in order to improve your performance on the assessment for this section.