AP Microeconomics Flashcards: Monopoly
Written by AP Content Team, Verified for 2026 AP Exams, Last updated: May 2026
Review key ideas with interactive flashcards. This set includes 10 cards to help you master important concepts.
How does a monopoly determine its profit-maximizing quantity of output?
A monopoly determines its profit-maximizing quantity by producing where marginal revenue (MR) is equal to marginal cost (MC).
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How does a monopoly determine its profit-maximizing quantity of output?
A monopoly determines its profit-maximizing quantity by producing where marginal revenue (MR) is equal to marginal cost (MC).
Using a graph or table, how do you calculate the area of deadweight loss in a monopoly?
Deadweight loss is the area of the triangle formed between the demand curve, the marginal cost curve, and the profit-maximizing quantity.
How would you calculate a monopolist's profit or loss from a graph?
Profit or loss is calculated by finding the area of the rectangle formed by the difference between price and average total cost at the profit-maximizing quantity.
How is the area of consumer surplus calculated on a monopoly graph?
Consumer surplus is calculated as the area below the demand curve and above the price charged by the monopolist, up to the profit-maximizing quantity.
On a graph, how is the area of producer surplus for a monopolist identified?
Producer surplus is the area above the marginal cost curve and below the monopoly price, from zero up to the profit-maximizing quantity.
What allows a single firm in a natural monopoly to operate more efficiently than multiple firms?
A natural monopoly has long-run economies of scale, meaning its average cost per unit falls as it increases production to serve the entire market demand.
In a monopoly, what is the relationship between the price charged and marginal cost?
At the profit-maximizing quantity, the price a monopoly charges is greater than its marginal cost (P > MC).
What is the defining characteristic of a monopoly?
A monopoly exists because of barriers to entry that prevent other firms from entering the market.
What is the equilibrium condition for a firm in an imperfectly competitive market?
Equilibrium is reached when the firm makes its decision to produce the quantity where marginal revenue equals marginal cost (MR = MC).
What is a natural monopoly?
A natural monopoly is a firm that has long-run economies of scale throughout the entire effective demand for its product.