AP Micro Unit 4

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

• negative when the firm is maximizing profit
• increasing at a constant rate
• equal to the price           
• less than the price

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

• decrease their output

• produce where the MR is negative

• produce where the MR is zero

• produce where the demand curve intersects the MC

A perfectly competitive industry is different from a monopoly in that 

• monopolies produce a greater quantity 
• monopolies maximize profit where MC exceeds MR
• monopolies have U-shaped average total cost curves
• perfect competition produces the allocatively efficient quantity               

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

• the monopoly will break even and make no economic profit
• the monopoly will produce the socially optimal quantity
• consumer surplus will decrease
• the monopoly will make more profit

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 only one price

Which of the following is correct regarding the four market structures?

• 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 are price makers

To maximize profits, the monopolist will produce where

• MR=MC
• MR>MC
• MR = 0

The monopolist's profit-maximizing output is

• 0
• 4
• 8
• 10

The monopolist's total revenue equals

• $80
• $160
• $240
• $300

The monopolist's total cost equals

• $20
• $80
• $160
• $0