module 62 Monopoly and Public Policy 623
Section 11 Market Structures: Perfect Competition and Monopoly
1 point:The axes are correctly labeled.
1 point:The demand curve is labeled and sloped downward.
1 point:The marginal revenue curve is labeled, sloped downward, and below
the demand curve.
1 point:The average total cost curve is labeled and downward sloping (not
U-shaped!).
1 point:The marginal cost curve is labeled and below the average total cost
curve.
1 point:The profit-maximizing output, QM,is shown on the horizontal axis
whereMC=MR.
1 point:The profit-maximizing price is found on the demand curve above the
point where MC=MR.
1 point:The monopoly profit area is correctly shaded and identified.
1 point:The regulated price is labeled on the vertical axis to the left of the point
where the demand curve crosses the average total cost curve.
- Draw a correctly labeled graph of a natural monopoly. Use
your graph to identify each of the following:
a. consumer surplus if the market were somehow able to
operate as a perfectly competitive market
b. consumer surplus with the monopoly
c. monopoly profit
d. deadweight loss with the monopoly