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AP Microeconomics Prd 3 B B Explain Using Graphs Where Appropriate Equilibrium Firm Decision Making Consumer Surplus Producer Surplus Profit Loss Questions

Analyze monopoly equilibrium with demand, marginal revenue, marginal cost, and ATC, then evaluate price, profit, surplus, and inefficiency.

Syllabus
Effective Fall 2026
Course
AP Microeconomics

Exam points

  • identify monopoly barriers and distinguish a natural monopoly by declining ATC across market demand
  • draw demand, MR, MC and ATC and select quantity at MR = MC before reading price from demand
  • derive marginal revenue from a demand or total-revenue schedule and compare it with marginal cost
  • calculate or shade monopoly economic profit or loss using (P - ATC) × Q
  • use the sign of MR to connect elastic demand, total-revenue maximisation and output choice
  • calculate or shade consumer surplus, producer surplus and total economic surplus on a monopoly graph
  • locate the allocatively efficient quantity at P = MC and calculate the monopoly deadweight loss
  • compare monopoly with perfect competition using higher price, lower output and P > MC
  • regulate a natural monopoly at P = MC or zero-profit P = ATC and identify any resulting loss
  • distinguish lump-sum changes that leave Q and DWL fixed from per-unit changes that shift MC
  • trace removal of a monopoly barrier into greater competition, lower price and higher consumer surplus

AP Microeconomics Prd 3 B B Explain Using Graphs Where Appropriate Equilibrium Firm Decision Making Consumer Surplus Producer Surplus Profit Loss Questions question 1

[Maximum number: 5]

Voda Reservoir is a profit-maximizing firm and the only producer of bottled water in a country.

Currently, Voda Reservoir is earning negative economic profit.

Question (a)

(a)

Draw a correctly labeled graph for Voda Reservoir and show each of the following.

[ 5 ]

Question (i)

(i)

The profit-maximizing quantity, labeled QM\mathrm{Q}_{\mathrm{M}}

[ 2 ]

Question (ii)

(ii)

The profit-maximizing price, labeled PM\mathrm{P}_{\mathrm{M}}

[ 1 ]

Question (iii)

(iii)

The average total cost curve consistent with Voda Reservoir earning negative economic profit, labeled ATC

[ 1 ]

Question (iv)

(iv)

The area of deadweight loss, shaded completely

[ 1 ]
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