Micro Unit 4 Intro- Imperfect Competition AP Economics

Jacob Clifford introduces imperfect competition, focusing on monopolies, their characteristics, and how they differ from perfect competition. He explains the concept of price makers and the relationship between demand and marginal revenue, using a review packet example to illustrate price setting. The video concludes with a discussion on graphing demand and marginal revenue, emphasizing the importance of understanding these concepts in economics.

What is a key characteristic of a monopoly that differentiates it from perfect competition?

• Low barriers to entry

• Many firms in the market

• Unique product with no close substitutes

• Price is set by the market

In a monopoly, why does marginal revenue not equal the price?

• Because the firm has no control over the price

• Because the firm can sell unlimited units at the same price

• Because the demand curve is horizontal

• Because lowering the price to sell more units reduces revenue from previous units

What happens to total revenue when a monopolist lowers the price to sell more units?

• Total revenue always increases

• Total revenue always decreases

• Total revenue may increase or decrease depending on the price elasticity of demand

• Total revenue remains constant

How is the demand curve typically represented in a monopoly?

• Downward-sloping

• Horizontal

• Vertical

• Upward-sloping

Why is it important to understand the graphical representation of demand and marginal revenue in monopolies?

• To determine the number of firms in a market

• To predict the behavior of firms in perfect competition

• To analyze the impact of government regulations on monopolies

• To understand how monopolies set prices and output levels