Microeconomics

Table of Contents

1. Topic pack - Microeconomics - introduction
2. 1.1 Competitive Markets: Demand and Supply
3. 1.1 Competitive Markets: Demand and Supply - notes
4. 1.1 Competitive markets - questions
5. 1.1 Competitive markets - simulations and activities
6. 1.2 Elasticities
7. 1.2 Elasticities - notes
8. Section 1.2 Elasticities - questions
9. Section 1.2 Elasticities - simulations and activities
10. 1.3 Government intervention
11. 1.3 Government Intervention - notes
12. 1.3 Government intervention - questions
13. 1.3 Government intervention - simulations and activities
14. 1.4 Market failure
15. 1.4 Market failure - notes
16. Section 1.4 Market failure - questions
17. Section 1.4 Market failure - simulations and activities
18. 1.5 Theory of the firm
19. 1.5 Theory of the firm - notes (HL only)
20. Section 1.5 Theory of the firm - questions
21. Section 1.5 Theory of the firm - simulations and activities
    1. DragIT - fixed cost curve
    2. DragIT - variable cost curve
    3. DragIT -cost curves
    4. Step-by-step - Short-run total cost curve
    5. DragIT -revenue curve
    6. DragIT - Revenue curves (1)
    7. DragIT - Revenue curves (2)
    8. PlotIT - Profit maximisation
    9. DragIT - Perfect competition
    10. Step-by-step - perfect competition, short-run supernormal profit
    11. Step-by-step - perfect competition, short-run losses
    12. Step-by-step - perfect competition, firm and industry
    13. DragIT - Monopoly (1)
    14. DragIT - Monopoly (2)
    15. Step-by-step - monopoly
    16. DragIT - Welfare loss under monopoly
    17. Step-by-step - monopolistic competition, short-run
    18. Step-by-step - monopolistic competition, short-run
22. Print View

DragIT - Monopoly (1)

The amount of profit that the firm under monopoly makes depends on (a) demand, and hence the position of the AR and MR curves; (b) costs, and hence the position of the AC and MC curves.

In the diagram below, drag the average and marginal cost curves to see the impact that changes in cost will have on the firm's profitability.

1

Monopoly equilibrium If AC is greater than AR where MC=MR, then the monopolist will be making a loss. a) True b) False Yes, that's correct. The statement is true. If the monopoly is maximising profits (MC=MR) and the average cost is great than the price (average revenue), then the firm will be making a loss. Try it on the above diagram.No, that's not right. The statement is true. If the monopoly is maximising profits (MC=MR) and the average cost is great than the price (average revenue), then the firm will be making a loss. Try it on the above diagram.Your answer has been saved.

2

Monopoly - equilibrium Where the AC is tangential to the AR curve the monopolist will be making supernormal profit. a) True b) False Yes, that's correct. The statement is false. If the AC is tangential to the AR (just touching it), then the monopolist is making just normal profit.No, that's not right. The statement is false. If the AC is tangential to the AR (just touching it), then the monopolist is making just normal profit.Your answer has been saved.