total costs curves. After all, the firm does not know exactly what would happen if it were to alter production

dramatically. However, a monopolist often has fairly reliable information about how changing output by small

or moderate amounts will affect its marginal revenues and marginal costs, because it has had experience with

such changes over time and because modest changes are easier to extrapolate from current experience. A

monopolist can use information on marginal revenue and marginal cost to seek out the profit-maximizing

combination of quantity and price.

Table 9.3 expands Table 9.2 using the figures on total costs and total revenues from the HealthPill example to

calculate marginal revenue and marginal cost. This monopoly faces typical upward-sloping marginal cost and

downward-sloping marginal revenue curves, as Figure 9.5 shows.

Notice that marginal revenue is zero at a quantity of 7, and turns negative at quantities higher than 7. It may
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