2003 AP MICRO EXAM (Question 2)
(a) Draw a CLG showing a typical monopoly that is maximising profit and indicate each of the following.
(b) Explain the relationship between the demand curve and the MR curve.
The MR curve is below the Demand curve for a monopolist. Monopolists must lower their price to sell more quantity and they loose the revenue on the previous units they would have made at the higher price.
(c) Label each of the following on your graph in part (a)
(i) Consumer surplus
(ii) Deadweight loss