Quantity

Demand

Marginal Revenue

Marginal Cost

Average Cost

Q

P

MR

MC

AC

1

2

3

4

5

6

7

8

1,200

1,200

1,100

1,000

1,000

800

900

800

700

600

500

600

400

200

0

–200

TABLE 9.5

500

275

225

250

400

850

1,500

2,400

500

388

333

313

330

417

571

800
228 9 • Monopoly

FIGURE 9.6 Illustrating Profits at the HealthPill Monopoly This figure begins with the same marginal revenue and

marginal cost curves from the HealthPill monopoly from Figure 9.5. It then adds an average cost curve and the

demand curve that the monopolist faces. The HealthPill firm first chooses the quantity where MR = MC. In this

example, the quantity is 5. The monopolist then decides what price to charge by looking at the demand curve it

faces. The large box, with quantity on the horizontal axis and demand (which shows the price) on the vertical axis,

shows total revenue for the firm. The lighter-shaded box, which is quantity on the horizontal axis and average cost of
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