AP Microecon

• Profit-maximizing quantity is where

• MR = MC

• Price charged by the monopolist is found by

• going up from MR = MC to the demand curve

• Reason: Once you find Q where MR = MC, the price is on the demand curve at that Q.

demand curve on a monopoly graph is the same as?

AR and P (Price)

• Area representing total economic profit 

• (P − ATC) × Q

• If ATC > P

• the monopoly is experiencing a loss

• MR curve on a linear demand curve is..

• Lies below demand

• Reason: For a straight-line demand, MR has the same intercept but twice the slope, lying below AR/D.

• Allocative efficiency occurs where

• P = MC

• Productive efficiency occurs at

• the minimum point on ATC

• Natural monopoly on graph has 

• downward-sloping demand and ATC decreasing over relevant range

• Reason: A natural monopoly exists because one firm can supply the market at lower cost than multiple firms (declining ATC).

• Monopoly with price discrimination charges what for price?

• Different prices can be charged to different consumers