AP Microeconomics: Monopoly Quiz

A monopoly is the sole producer in the industry and has significant barriers to entry to thwart competition. The monopoly maximizes profits where marginal revenue equals marginal cost. Technically, a monopoly is illegal but many exceptions exist. Since a monopoly is contrary to the operation of the free market, sometimes the government will regulate the firm by using quantity controls such as average cost pricing, marginal cost pricing, or the fair return price.