Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 5  Firm Behavior and the Organization of Industry

Chapter 15 of 36  Monopoly

Section  12 of 32

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Figure 5 here


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Figure 5 - The Monopolist's Profit

The area of the box BCDE equals the profit of the monopoly firm.

BC the height of the box is price minus average total cost which equals profit per unit sold.

DC the width of the box is the number of units sold.

…

Abbreviations:

Total Revenue TR

Total Cost TC

Average Total Cost ATC

Quantity of units produced Q

Price  P

…

Total profit = TR – TC

Price per unit = average revenue = TR / Q

Cost per unit = ATC = TC / Q

Total profit = (P - ATC) x Q

… …

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