The demand curve for the monopolist is a negative curve. If the monopolist charges the same price for all units sold, its total revenue (tr) is: Average revenue is the total revenue divided by quantity: Ar = tr/q = (p x q) / q = p. Marginal revenue is the revenue resulting from the sale of an additional unit of production: Mr = change of tr/ change of q. The mr will be less than the price for a monopolist. There is a trade off between the price and the quantity for any negative (downward) curve. The mr is below the demand curve. When there is a price change two things happen: Decrease in price means less revenue; increase in price may mean more revenue. In a short run and a long run, a monopolist can make profits. In the very long run, there is a process called creative destruction. Technological changes and innovations can circumvent effective entry barriers.
