one firm supplies the entire market, no other firm can enter without facing a cost disadvantage.

9.2 How a Profit-Maximizing Monopoly Chooses Output and Price

A monopolist is not a price taker, because when it decides what quantity to produce, it also determines the

market price. For a monopolist, total revenue is relatively low at low quantities of output, because it is not

selling much. Total revenue is also relatively low at very high quantities of output, because a very high quantity

will sell only at a low price. Thus, total revenue for a monopolist will start low, rise, and then decline. The

marginal revenue for a monopolist from selling additional units will decline. Each additional unit a monopolist

sells will push down the overall market price, and as it sells more units, this lower price applies to increasingly

more units.

The monopolist will select the profit-maximizing level of output where MR = MC, and then charge the price for
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