When a monopolist identifies its profit maximizing quantity of output, how does it decide what price to charge?

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There are two ways to answer this question, the economic theory way and the real life way.

In real life, firms have to experiment with prices to see what price will allow them to sell the number of goods they produce at the profit maximizing (MR=MC) point.

In economics textbooks, we assume that these experiments have already been done and we use graphs to determine the price.  On the supply and demand graph for a monopoly, the MR curve is to the left of the demand curve.  The monopolist sets its price by finding the quantity where MR=MC and then going straight up from that point to the demand curve.  The point where the demand curve hits the profit maximizing quantity is the correct price to charge.

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