Monopoly FRQ

Review

For the free response question make sure that you can draw and analyze the following:

Graphing Concepts:

-Properly labeled X & Y Axes

-Marginal Cost

-Average Total Cost

-Demand

-Marginal Revenue

Important Concepts:

-Area of Economic Profit or Loss

-Deadweight Loss

-Socially Optimal/Allocatively Efficient Point (P=MC)

-Break Even or Zero Economic Profit Output (P=ATC)

-Revenue Maximizing/Unitary Elastic Output (MR=0)

-Consumer Surplus for the single price monopolist

-Consumer Surplus for the perfectly price discriminating monopolist

-Producer Surplus

Problem Solving & Explanation:

-Understanding the impact of a per-unit or lump-sum tax or subsidy

-Comprehending the elastic and inelastic portions of the demand curve

-Understanding the changes that would occur under perfect price discrimination and how consumer surplus, profits and output would change.

It is HIGHLY RECOMMENDED that you use the link below to study:

http://www.duffka.com/firm-behavior-and-market-structure/monopoly

You can also look at other practice FRQ’s and your graph on Notability.