With no competitors, a firm restricts output to push up the price. See exactly how a monopoly prices, and the social cost — the deadweight loss — it leaves behind.
Monopoly PricingLive
market power & deadweight loss
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A monopolist maximizes profit where marginal revenue equals marginal cost — then charges the price the demand curve allows. Because MR lies below demand, the monopoly produces less and charges more than a competitive market (where price equals MC). The red triangle is the deadweight loss: mutually beneficial trades that never happen.
Reading this result: At MC = $30, the monopolist makes 35 units and charges $65 — a $35 markup over cost. That output is exactly half the competitive 70, and the shaded triangle (613) is the welfare lost to that restraint.
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How it works
A profit-maximizing monopolist produces where marginal revenue equals marginal cost, then charges the highest price demand will bear. Because marginal revenue lies below the demand curve, output is lower and price higher than in perfect competition, where price equals marginal cost. The gap is deadweight loss: value-creating trades that never happen.
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