AP MICROECONOMICS UNIT 4 ACTUAL
EXAM SCRIPT 2026 QUESTIONS AND
SOLUTIONS GRADED A+
◉How does demand compare to marginal revenue in imperfect
competition? Answer: Demand is greater than marginal revenue.
◉Why is demand equal to marginal revenue for perfectly
competitive firms? Answer: They are price takers and sell every unit
at the same price, so the additional revenue of the next unit is equal
to the price.
◉Why is demand greater than marginal revenue for imperfectly
competitive firms? Answer: To sell an additional unit, the firm must
lower the price of all units, meaning the marginal revenue is the
price minus the revenue lost from lowering the price of previous
units.
◉In which range of the demand curve do imperfectly competitive
firms always produce? Answer: The elastic range.
◉At what point is total revenue maximized? Answer: When
marginal revenue is zero.
, ◉What defines a monopoly? Answer: A market controlled by one
firm with high barriers to entry.
◉What is price discrimination? Answer: Selling the same product to
different people for different prices.
◉What are the characteristics of monopolistically competitive
markets? Answer: Differentiated products, low barriers to entry,
and no economic profit in the long run.
◉What defines an oligopoly? Answer: A market made up of a few
interdependent firms that tend to collude.
◉What tool do oligopolies use to determine the best course of action
when competing? Answer: Game theory.
◉Name three examples of barriers to entry. Answer: High start-up
costs (economies of scale), control of key resources, and
governmental or legal barriers.
◉True or False: If a monopoly is earning economic profit, other
firms will enter the market. Answer: False.
EXAM SCRIPT 2026 QUESTIONS AND
SOLUTIONS GRADED A+
◉How does demand compare to marginal revenue in imperfect
competition? Answer: Demand is greater than marginal revenue.
◉Why is demand equal to marginal revenue for perfectly
competitive firms? Answer: They are price takers and sell every unit
at the same price, so the additional revenue of the next unit is equal
to the price.
◉Why is demand greater than marginal revenue for imperfectly
competitive firms? Answer: To sell an additional unit, the firm must
lower the price of all units, meaning the marginal revenue is the
price minus the revenue lost from lowering the price of previous
units.
◉In which range of the demand curve do imperfectly competitive
firms always produce? Answer: The elastic range.
◉At what point is total revenue maximized? Answer: When
marginal revenue is zero.
, ◉What defines a monopoly? Answer: A market controlled by one
firm with high barriers to entry.
◉What is price discrimination? Answer: Selling the same product to
different people for different prices.
◉What are the characteristics of monopolistically competitive
markets? Answer: Differentiated products, low barriers to entry,
and no economic profit in the long run.
◉What defines an oligopoly? Answer: A market made up of a few
interdependent firms that tend to collude.
◉What tool do oligopolies use to determine the best course of action
when competing? Answer: Game theory.
◉Name three examples of barriers to entry. Answer: High start-up
costs (economies of scale), control of key resources, and
governmental or legal barriers.
◉True or False: If a monopoly is earning economic profit, other
firms will enter the market. Answer: False.
