The Maxwell School

Syracuse University

Syracuse University

The Maxwell School

Syracuse University

Syracuse University

dPR/dQ = dTR/dQ - dTC/dQ = 0

Therefore, at the profit maximizing quantity, dTR/dQ (otherwise known as marginal revenue) must be equal to dTC/dQ (marginal cost). In other words, the monopolist will choose the Q that makes MR=MC.

To solve a monopoly problem you will need to write down equations for TR and TC as functions of Q. Then differentiate the two, set the resulting equations for MR and MC equal to each other, and solve for Q.

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URL: http://wilcoxen.maxwell.insightworks.com/pages/997.html

Peter J Wilcoxen, The Maxwell School, Syracuse University

Revised 08/10/2006

URL: http://wilcoxen.maxwell.insightworks.com/pages/997.html

Peter J Wilcoxen, The Maxwell School, Syracuse University

Revised 08/10/2006