Interactive A-level Monopoly Diagram

Model inputs

Use a slider or enter a value directly. The graph rescales automatically.

Demand

Price intercept a currency / unit

The AR curve's vertical intercept.

Demand slope b currency / unit of output

A larger value makes demand and MR steeper.

Costs

MC intercept c currency / unit

Marginal cost at zero output.

MC slope d currency / unit of output

The gradient of the MC curve.

Fixed costs F currency / period

Fixed costs affect AC and profit, not the MR = MC output rule.

Currency symbol

This example uses straight-line demand and a simple cost model. The equations are shown below the graph.

Monopoly output · Qₘ

—

Where MR = MC

Monopoly price · Pₘ

—

Read from AR at Qₘ

Average cost · ACₘ

—

At the monopoly output

Economic profit · π

—

π = (Pₘ − ACₘ) × Qₘ

Monopoly outcome

Set output where MR = MC, then read the price from the AR curve.

Supernormal profit

AR · demand MR · marginal revenue MC · marginal cost AC · average cost

Shaded area shows economic profit or loss. Profit / loss rectangle = (Pₘ − ACₘ) × Qₘ.

How to read the diagram

Standard A-level monopoly model

Find Qₘ

Locate the intersection of MR and MC. This gives the profit-maximising output.

Find Pₘ

Move vertically from Qₘ to the AR (demand) curve to read the monopoly price.

Compare Pₘ with ACₘ

The shaded rectangle shows total economic profit, or a loss if ACₘ is above Pₘ.

AR = a − bQ MR = a − 2bQ MC = c + dQ AC = F/Q + c + (d/2)Q

With positive output, Qₘ = (a − c) / (2b + d), provided a > c. Fixed costs are included in AC and profit, but do not change the MR = MC output condition.

create a diagram of the monopoly graph that students study a...