In the short term, the monopoly manufacturer achieves the profit maximization principle of MR=SMC through the adjustment of output and price under a given production scale.
The monopoly manufacturer adopts the principle of MR= According to the principle of SMC, the output and price are adjusted to P0 and Q0 respectively. At the equilibrium output Q0, the monopoly manufacturer can make a profit, that is, π>0. At this time, AR>SAC, its maximum profit is equivalent to the area of ??the shaded area in the figure; monopoly The manufacturer can also make a loss, that is, π < 0, as shown in part (b). At this time, AR < SAC, and its maximum loss amount is equivalent to the shaded part in the figure. In the case of loss, the monopoly manufacturer needs to calculate the loss according to AR and AVC. comparison to decide whether to continue production: when AR>AVC, the monopoly manufacturer continues to produce; when AR Thus, the short-term equilibrium condition of the monopoly manufacturer is: MR=SMC, and its profit can be greater than zero, less than zero, or equal to zero. . Microeconomics Fifth Edition has pictures on page 178