AP Micro Unit 4

Front

For a non-price discriminating monopoly, the marginal revenue is

Back

less than the price

Front

Monopolies are able to make economic profit in the long run because: they can price discriminate, they have barriers to entry, they have inelastic demand curves, the demand curve is greater than the MR

Back

they have barriers to entry

Front

Assume a monopolist is currently producing in the elastic range of their demand curve. To maximize total revenue, the monopoly should:

Back

produce where the MR is zero

Front

A perfectly competitive industry is different from a monopoly in that

Back

perfect competition produces the allocatively efficient quantity

Front

If the government regulates a natural monopoly by setting a price ceiling where the MC equals the demand then

Back

the monopoly will produce the socially optimal quantity

Front

If a non-price discriminating monopoly could suddenly start price discriminating and charge each consumer exactly what they are willing to pay, all of the following would occur EXCEPT: The demand would equal the MR, The monopoly would earn more profit, There would be no dead-weight loss, The monopoly would charge all consumers higher prices

Back

The monopoly would charge all consumers higher prices.

Front

Assume a profit maximizing monopoly was subject to a lump sum tax. Which of the following will occur? Price and quantity will stay the same, Price will increase and quantity will decrease, Price will increase but quantity will stay the same, The monopoly would produce the socially optimal quantity

Back

Price and quantity will stay the same

Front

Which of the following best characterizes monopolistic competition? Options: Large number of firms with identical products, Large number of firms with high barriers to entry, Unique products and strategic pricing, Low barriers to entry and differentiated products

Back

Low barriers to entry and differentiated products

Front

Which of the following is true for monopolistically competitive firms in long run equilibrium? Options: Price equals ATC, Price equals MC, Firms are maximizing total revenue, Firms will eventually leave the industry since they are making no economic profit

Back

Price equals ATC

Front

Which of the following is correct regarding the four market structures? Options: Perfectly competitive firms and monopolies are price takers, Monopolies and monopolistically competitive firms have high barriers to entry, Game theory is used in all market structures to determine the price firms should set, Monopolies and monopolistically competitive firms are price makers

Back

Monopolies and monopolistically competitive firms are price makers