<p>Price minus marginal cost gives you <strong><em>marginal profit</em></strong>.</p>

<p><span class="math-container">\begin{align*}
\text{Total profit}&amp;=\text{Revenue}-\text{Total cost}\\
\frac{\text{Total profit}}{\text{Quantity}}&amp;=\frac{\text{Revenue}-\text{Total cost}}{{\text{Quantity}}}\\
&amp;=\frac{\text{Revenue}}{{\text{Quantity}}} - \frac{\text{Total cost}}{{\text{Quantity}}}\\\\
\text{Per-unit profit}&amp;=\text{Price}-\text{Average total cost}
\end{align*}</span></p>

CC BY-SA 4.0
2019-12-11T03:17:13.577Z
Thanks a lot, this working you showed isn't for magrinal profit, right?
Christopher U
CC BY-SA 4.0
2019-12-11T03:18:48.030Z
And why is revenue per quantity price?
Christopher U
CC BY-SA 4.0
2019-12-11T03:22:02.200Z
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
CC BY-SA 4.0
2019-12-11T03:25:14.537Z
But isn't quantity you sell multiplied by per unit money you get QR, not Q/R?
Christopher U
CC BY-SA 4.0
2019-12-11T03:29:23.913Z
Let's call "per-unit money" price. What I said was Q*P = Revenue. So Revenue / Q = P.
Art
CC BY-SA 4.0
2019-12-11T03:13:00.340Z
2019-12-11T03:13:00.340Z
Art
<p><a href="https://i.sstatic.net/KIQv5.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/KIQv5.png" alt="enter image description here"></a></p>

<p>I understand that the P-ATC gives the per unit economic profit </p>

<p>Why is this the case? Why wouldn't we take price minus the marginal cost?</p>

<monopoly>
Why is economic profit for a monopoly per unit demand minus ATC?
Christopher U
# Why is economic profit for a monopoly per unit demand minus ATC?

(Asked by: username_0 on 2019-12-11)

[![enter image description here](https://i.sstatic.net/KIQv5.png)](https://i.sstatic.net/KIQv5.png)

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?

**Tags:** monopoly

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## 1 answers

### Answer by username_1 on 2019-12-11. Score: 1 | Accepted 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\*}

> **Comments:**
> **username_0**: Thanks a lot, this working you showed isn't for magrinal profit, right?  
> **username_0**: And why is revenue per quantity price?  
> **username_1**: 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.  
> **username_0**: But isn't quantity you sell multiplied by per unit money you get QR, not Q/R?  
> **username_1**: Let's call "per-unit money" price. What I said was Q*P = Revenue. So Revenue / Q = P.  

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