hello, how is doing everybody
could somebody please give me a hand

please check this graph

the blue line represents the demand
the red line represents the marginal cost
and the orange line represents the marginal revenue

There's a theory in economics which says a monopolist will maximizes profits by choosing the level where marginal revenue equal marginal cost, marginal revenue is the change in total revenue as result of producing one more unit of out, and marginal cost the change in total cost as result of producing one more unit of output.

the question is. If the goal of the monopolist is to maximize profit, how many units will it produce and at what price will charge each unit? ( according to the graph )

I really appreciate your help.

2. Originally Posted by jhonwashington
hello, how is doing everybody
could somebody please give me a hand

please check this graph

the blue line represents the demand
the red line represents the marginal cost
and the orange line represents the marginal revenue

There's a theory in economics which says a monopolist will maximizes profits by choosing the level where marginal revenue equal marginal cost, marginal revenue is the change in total revenue as result of producing one more unit of out, and marginal cost the change in total cost as result of producing one more unit of output.

the question is. If the goal of the monopolist is to maximize profit, how many units will it produce and at what price will charge each unit? ( according to the graph )

I really appreciate your help.
If the monopolist prices his widget at $4 he will sell 3000 units, the cost of producing the 3001-st unit will be an additional$4 which is equal to his
additional revenue (in fact slightly less than the additional revenue as it is
falling per unit as the sales rise), so it is not worth the effort of producing
that extra unit at that price.

At \$4 per unit he could have sold 6000 units but the revenue per unit
at this level of sales would have been negative.

RonL