MONOPOLY

95

his  receipts  and  his  expenses  when  we  include
in  the  latter  a  remuneration  just  sufficient
to  induce  him  to  do  the  amount  of  work  that
he  does.  This  difference  between  his  expenses,
thus  widely  regarded,  and  his  gross  receipts
may  be  called  monopoly  revenue.  His  object
is  to  maximise  monopoly  revenue,  and  this
is  maximised  when  the  product  of  the  amount
sold  and  the  difference  between  the  price  and
the  monopolist’s  average  costs  is  the  greatest
possible.  The  theory  may  be  illustrated  with
the  aid  of  the  following  table  :—

Demand
Output  price
in  tona,  per  ton.
90  £50
100  £49
110  £48
120  £46

Aggregate  Aggregate

receipts.
£4,500
£4,900
£5,280
£5,520

costs.
£4,000
£4,350
£4,700
£5,000

Monopoly
Revenue.
£500
£550
£580
£520

In  the  case  represented  in  the  table  the
output  would  be  110  tons,  at  which  output
monopoly  revenue  is  maximised.
It  looks  as  if  the  subject  of  monopoly  were
drawing  us  away  from  the  high  ground  of
pure  theory  where  the  effect  of  trifling  variations—of ­
  differentiating  experience—explains
everything.  It  is  true  that  the  consequences
of  such  variations  in  demand  prices  and
supply  prices  furnish  the  monopolist  with