- Each round, the monopolist uses the “+” button to sequentially add pallets to the shipment of pharmaceuticals.
- Clicking the pill button at the top of the stack of pallets will subtract one pallet from the shipment.
- When the monopolist adds or subtracts a pallet from the shipment, price and marginal revenue will adjust on screen.
- To see a graphical depiction of the monopolist problem, click the “Show Graph” button to see the demand, marginal revenue, and marginal cost curves.
- To finalize the shipment press “Done”
Suppose the monopolist has a cost of $2 per unit. The monopolist sets quantity to be 7 units. Given the market demand curve: P = 20 - 2Q that means the market price will be P=20 - 2(7)=6. So the monopolist profit is:
Profit = 7 x ($6 - $2) = $28
