Profitable Price Discount in Residual Market

Abstract

In introductory microeconomics, the equilibrium price and quantity are determined where the marginal cost (MC) is equal to marginal revenue (MR), that is, At this point, the profit is maximized. However, from a manager’s point of view, this is not sufficient to make maximum profit. A manager always goes beyond the  to capture the residual market. In addition, due to single point equilibrium, there is no such supply curve. However, if the profitable supply by a monopolist in a residual market is considered, it is possible to trace out a supply curve of a monopolist. This paper attempts to analyze the residual market operations of a monopolist and to identify some points where  but still there is some profit left untapped.