more lightly, shows total costs; that is, quantity on the horizontal axis multiplied by average cost on the vertical

axis or 5 x $330 = $1650. The larger box of total revenues minus the smaller box of total costs will equal profits,

which the darkly shaded box shows. Using the numbers gives $4000 - $1650 = $2350. In a perfectly

competitive market, the forces of entry would erode this profit in the long run. However, a monopolist is

protected by barriers to entry. In fact, one obvious sign of a possible monopoly is when a firm earns profits

year after year, while doing more or less the same thing, without ever seeing increased competition eroding

those profits.

Access for free at openstax.org
9.2 • How a Profit-Maximizing Monopoly Chooses Output and Price 229
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