Uniform pricing

It is also called "simple monopoly pricing". The buyers are free to choose the quantity at a fixed price. 

Output determination

A wealth maximizing monopolist will produce according to the following two principles:

   Produce only if AR > AC or AR = AC 

   Keep producing until MR = MC  

     

 

Price determination

The seller will select the highest possible price for all output to be sold out. 

  The price will equal the marginal use value.

  Click to read 'Table1' and 'Diagram1' again!

Monopoly rent

It is the surplus earning of a seller who faces a downward sloping demand curve. 

   It can be taxed away without affecting the present choice of production. 

  Monopoly rent = Total revenue - Total cost

  Click to read 'Diagram2' again!

  Is monopoly rent a 'profit'? 

    

Consumer surplus (CS)

It is the surplus earning of the buyers. 

  CS = Total  use value - total expenditure

  Click to read 'Diagram3'