15. Revenue maximization in Monopoly
Instead of Profit maximization (MC=MR), a
monopolist may choose revenue maximization
(MR=0).
Revenue: Output (quantity) x cost of each
output
Profit: Total revenue- total costs
Profit maximization: Profit maximization occurs
when MC = MR (Marginal cost = marginal
revenue)
Revenue maximization: Revenue maximization
occurs when MR=0 (Marginal revenue = 0)
21. Conclusion
Productively Charge higher
Exercise anti-
A monopoly and prices and
competitive
is: allocatively produce
behaviour.
inefficient. lower output.