00:01
So here we have a monopoly, right? and the key question here is, what is their profit situation? and to do that, we need to know what a monopoly does.
00:11
And what a monopolist does is to maximize profit, right? and they do that by setting marginal revenue equals to marginal cost.
00:21
So the first thing, when i replicate this diagram that i'm going to focus on, is the marginal cost curve, we have a demand curve, and that demand curve induces a marginal revenue curve.
00:33
So this is the point where the monopolist wants to operate.
00:37
And that point is at q2.
00:40
The other q's are bait.
00:42
Once we have that, we can figure out the price, right? so this gives us q2.
00:48
And once, sorry, i shouldn't say q, q squared, i should say q2.
00:52
Once we have q2, this gives us price three, right? once we decide the quantity of production, we reflected off the demand curve and get the price...