AP Micro Monopoly and Price Discrimination Quiz

The profit-maximizing output for this monopoly is

• 0

• 4

• 5

• 8

• 10

The total revenue for this monopoly is

• $80

• $160

• $240

• $300

• $480

The total cost for this monopoly is

• $20

• $80

• $160

• $240

• $480

This monopoly's profit earning price is equal to

• $0

• $40

• $80

• $160

• $240

How is a monopoly different from a perfectly competitive industry with the same costs?

I. It produces a smaller quantity

II. It charges a higher price

III. It earns normal profits in the long run

• I only

• II only

• III only

• I and II only

• I, II, and III

Which is true of a monopoly compared to a perfectly competitive market with the same costs?

I. Consumer surplus is smaller

II. Profit is smaller

II. Deadweight loss is smaller

• I only

• II only

• III only

• I and II only

• I, II, and III

A natural monopoly

• Experiences diseconomies of scale

• Has a lower ATC if there is a single firm in the market

• Occurs in a market that relies on natural resources for its production

• Had decreasing returns to scale in the industry

• must be provided by the government to achieve efficiency

In the United States, which government action is most common for a natural monopoly

• Prevent its formation

• Break it up using antitrust laws

• Use price regulation

• Public ownership

• Elimination of the market

Which is most likely to be higher for a regulation natural monopoly than for an unregulated one

• Product variety

• Quantity

• Price

• Profit

• Deadweight loss

Which characteristic is necessary for firms in order to price discriminate?

• Free entry and exit

• Differentiated products

• Many sellers

• Some control over price

• Horizontal demand curve