# Why is economic profit for a monopoly per unit demand minus ATC? I understand that the P-ATC gives the per unit economic profit

Why is this the case? Why wouldn't we take price minus the marginal cost?

## 1 Answer

Price minus marginal cost gives you marginal profit.

\begin{align*} \text{Total profit}&=\text{Revenue}-\text{Total cost}\\ \frac{\text{Total profit}}{\text{Quantity}}&=\frac{\text{Revenue}-\text{Total cost}}{{\text{Quantity}}}\\ &=\frac{\text{Revenue}}{{\text{Quantity}}} - \frac{\text{Total cost}}{{\text{Quantity}}}\\\\ \text{Per-unit profit}&=\text{Price}-\text{Average total cost} \end{align*}

• Thanks a lot, this working you showed isn't for magrinal profit, right? – Christopher U Dec 11 '19 at 3:17
• And why is revenue per quantity price? – Christopher U Dec 11 '19 at 3:18
• When you want to figure out what your revenue (basically total income) is, you multiply the quantity you sell by the per-unit money you get from selling, aka. price. The demand curve is the relationship between price and quantity demanded by the consumers. – Art Dec 11 '19 at 3:22
• But isn't quantity you sell multiplied by per unit money you get QR, not Q/R? – Christopher U Dec 11 '19 at 3:25
• Let's call "per-unit money" price. What I said was Q*P = Revenue. So Revenue / Q = P. – Art Dec 11 '19 at 3:29