Interactive simulator

Monopoly Pricing Simulator

A monopolist faces the whole market demand curve, so marginal revenue falls faster than price. This simulator shows demand, MR, and MC together: the monopolist produces where MR = MC and charges the highest price the demand curve allows at that quantity. Compare the outcome with perfect competition to see the deadweight loss of monopoly power. In this release this page is powered by the closest available interactive widget; a dedicated widget for this topic is planned.

030609012015001020304050Quantity QPrice PDSE (Q*=64, P*=18.0)
Qd = 100 − 2PQs = 10 + 3PEquilibrium price P* = 18.00Equilibrium quantity Q* = 64.00
Reading the market

Equilibrium solves Qd = Qs, so P* = (a − c) ÷ (b + d). Shifting demand changes a; shifting supply changes c. A ceiling only bites when set below P* (creating a shortage); a floor only bites when set above P* (creating a surplus).

How to use it

  1. Observe the demand, MR, and MC curves.

  2. Find the MR = MC quantity and the price on the demand curve above it.

  3. Compare monopoly price and quantity with the competitive outcome.

  4. Identify the deadweight loss triangle.

What you will learn

  • Explain why a monopolist produces where MR = MC.
  • Compare monopoly and competitive outcomes.
  • Identify deadweight loss from market power.

Model notes

Single-price monopoly with linear demand and constant MC is assumed. Price discrimination, regulation, and contestable-market pressures are omitted.