Monopoly Lab: Demand, Cost, and Lost Surplus
Compare illustrative monopoly and competitive outcomes for linear demand and constant marginal cost.
Free, with no sign-up.
For High school students and adults reviewing the topic.
About 10 minutes.
How does it work?
- Change the controls or open a named preset. Read the outputs, then check a challenge.
What will you get?
Compare the model’s outputs and check two challenges.
What does the model assume?
- All numbers are illustrative. A single-price monopolist faces P = A − BQ, where A is the demand intercept and B is its positive slope magnitude.
- Marginal revenue is A − 2BQ. Marginal cost is constant, with no fixed costs, taxes, externalities, capacity limit, or price discrimination.
- When A exceeds marginal cost, monopoly output solves MR = MC and competition solves P = MC. Otherwise output is zero; there is no unique transaction price to report.
- Profit is revenue minus variable cost. Consumer surplus is the triangle above price and below demand. Deadweight loss is the missing total surplus between monopoly and competitive output.
Which setup would you like to try?
What can you change?
Range: 20 to 200 dollars/unit.
Range: 0.5 to 5 dollars/unit².
Range: 0 to 240 dollars/unit.
What does the model predict?
| Quantity | Value | Unit |
|---|---|---|
| Monopoly quantity | 20.00 | units |
| Monopoly price | 60.00 | dollars/unit |
| Competitive quantity | 40.00 | units |
| Competitive price | 20.00 | dollars/unit |
| Monopoly profit | 800.00 | dollars |
| Monopoly consumer surplus | 400.00 | dollars |
| Deadweight loss | 400.00 | dollars |
Monopoly quantity 20; competitive quantity 40; deadweight loss 400 dollars.
Solid: demand. Dashed: marginal revenue. Dotted: marginal cost. Hatching: deadweight loss.
Can you reach these targets?
Keep demand P = 100 − 2Q. Choose marginal cost for monopoly output of 15 units.
- Target: Demand intercept A = 100 dollars/unit; tolerance 0 dollars/unit.
- Target: Demand slope magnitude B = 2 dollars/unit²; tolerance 0 dollars/unit².
- Target: Monopoly quantity = 15 units; tolerance 0.001 units.
Keep demand P = 100 − 2Q. Find the lowest marginal cost at which both outputs become zero.
- Target: Demand intercept A = 100 dollars/unit; tolerance 0 dollars/unit.
- Target: Demand slope magnitude B = 2 dollars/unit²; tolerance 0 dollars/unit².
- Target: Marginal cost = 100 dollars/unit; tolerance 0 dollars/unit.
- Target: Monopoly quantity = 0 units; tolerance 0 units.
- Target: Competitive quantity = 0 units; tolerance 0 units.