AP MICROECONOMICS UNIT 4 EXAM SCRIPT 2026 QUESTIONS WITH SOLUTIONS GRADED A+

AP MICROECONOMICS UNIT 4 EXAMINATION
TEST 2026 QUESTIONS WITH ANSWERS
GRADED A+

◉ Monopolies are price _______. Answer: makers


◉ Demand curve for a monopoly. Answer: the industry demand
curve
Demand = Price
Drop in price < drop in MR (drop price for all units)


◉ Graph for monopoly. Answer: profit maximizing at the point
where MC = MR, P = D
not allocatively efficient- creates DWL


◉ price discrimination. Answer: the business practice of selling the
same good at different prices to different customers; good is NOT
resellable


◉ Graph for price discrimination. Answer: allocatively efficient, but
all CS becomes PS because each consumer pays the most they will
pay

, ◉ Types of Regulations for Monopolies. Answer: fair return price
socially optimal price


◉ Fair-Return Price. Answer: P = ATC (normal profit)
may not be allocatively efficient


◉ Socially Optimal Price. Answer: P=MC
allocatively efficient, but may be below ATC


◉ Monopolistic Competition. Answer: a market structure in which
many firms sell products that are similar but not identical; little
price control by firms; relatively easy entry and exit; non-price
competition is inmportant


◉ non-price competition. Answer: a way to attract customers
through style, service, or location, but not a lower price; important
for monopolistic competition and oligarchies


◉ Graph for Monopolistic Competition. Answer: profit maximizing at
MR = MC, P = D at that point
not allocatively efficient
MR drops faster than D/P