To get the relationship among total, average and marginal revenue, consider a firm facing the following demand curve P = 6 – Q. ![]() The average revenge curve of the monopolist is just the market demand. The monopolist needs to know the marginal revenue (MR) in order to choose his profit maximising output level. ![]() The price the monopolist charges then follows directly from the market demand curve. Given this knowledge, he must then decide how much to produce and sell. To maximise profit, he must first determine the market demand and its cost which is crucial for a firm’s decision-making. But this does not mean that the monopolist can charge whatever price he wants - at least if his aim is to maximise profit. ![]() The monopolist is the market and has complete control over the amount of output offered for sale.
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