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A look at how Monster Power will work in patch 1.0.5. Note that all of these details were taken from the PTR (Public Test Realm), so some things might change on release.
Monster Power is going to be a great new addition to the game, but not a lot of details were known up to this point. The basic premise is that the higher the value is set, the stronger the monsters become and the bigger the reward you get. Reading the PTR patch notes, one is left pretty much in the dark.