The Monopolist's Choice

Demand is P = 12 − Q, so marginal revenue is 12 − 2Q (below the demand curve). Slide the marginal cost and watch the monopolist pick the output where MR = MC, charge the price buyers will bear, and leave a deadweight loss compared with competition.

Monopoly quantity
4
Monopoly price
$8.00
Competitive quantity
8
Markup over cost
$4.00
Deadweight loss
$8