• 64 questions

AP Econ Imperfect Competition Practice Test

Unofficial multiple-choice practice for Unit 4 of AP Microeconomics: monopoly, price discrimination, monopolistic competition, oligopoly and game theory.

Which market structure is an example of imperfect competition in a factor market?

Pick an answer, then press Check answer. Then you see Correct or Not quite, with the reason. Keys: A to D pick, Enter checks.

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Unofficial practice questions, not affiliated with the College Board. Bank checked October 11, 2026.

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All 64 questions

Topic 4.1: Imperfectly competitive markets 9

  • A firm in an imperfectly competitive output market wants to sell more units, with nothing else changing. What must it do? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.2; course topic 4.1
  • A government grants one firm a 20-year patent on a new process. In the course's terms, what kind of barrier to entry is this? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.4; course topic 4.1
  • A market has many sellers, each offering its own version of a product, and new sellers can open freely. Which structure is it? Wikipedia, "Monopolistic competition"; course topic 4.1
  • One mining firm owns every known deposit of a mineral that has no close substitute. Which barrier to entry protects it? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.4 and Wikipedia, "Barriers to entry"; course topic 4.1
  • What do barriers to entry do for firms already in an imperfectly competitive market? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.4 and Wikipedia, "Barriers to entry"; course topic 4.1
  • What does it mean to say that a firm has market power? Wikipedia, "Market power"; course topic 4.1
  • What signals that an imperfectly competitive market produces an inefficient quantity? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.3; course topic 4.1
  • Which market structure is an example of imperfect competition in a factor market? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.1 and Wikipedia, "Monopsony"; course topic 4.1
  • Which statement is true of monopoly, oligopoly and monopolistic competition but not of perfect competition? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.2; course topic 4.1
Show all 64 questions (55 more)

Topic 4.2: Monopoly 16

  • A monopolist can sell 1 unit at $10, 2 units at $9 each, 3 units at $8 each, 4 units at $7 each or 5 units at $6 each. Marginal cost is constant at $5 and there is no fixed cost. What is the most profit the firm can earn? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.6; course topic 4.2
  • A monopolist can sell 1 unit at $10, 2 units at $9 each, 3 units at $8 each, 4 units at $7 each or 5 units at $6 each. Marginal cost is constant at $5. Which quantity and price maximize profit? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.6; course topic 4.2
  • A monopolist can sell 4 units at $10 each or 5 units at $9 each. What is the marginal revenue of the fifth unit? Wikipedia, "Marginal revenue"; course topic 4.2
  • A monopolist faces a straight-line demand curve that runs from a price of $20 at zero units to $0 at 20 units. Marginal cost is constant at $4 a unit and there is no fixed cost. How large is the deadweight loss at the profit-maximizing output? Wikipedia, "Deadweight loss" and AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.6; course topic 4.2
  • A monopolist faces a straight-line demand curve that runs from a price of $20 at zero units to $0 at 20 units. Marginal cost is constant at $4 a unit and there is no fixed cost. How much consumer surplus is left at the profit-maximizing price? Wikipedia, "Economic surplus"; course topic 4.2
  • A monopolist faces a straight-line demand curve that runs from a price of $20 at zero units to $0 at 20 units. Marginal cost is constant at $4 a unit and there is no fixed cost. What price does the profit-maximizing firm charge, and what profit does it earn? Wikipedia, "Monopoly" and AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.6; course topic 4.2
  • A monopolist faces a straight-line demand curve that runs from a price of $20 at zero units to $0 at 20 units. Marginal cost is constant at $4 a unit and there is no fixed cost. What quantity maximizes profit? Wikipedia, "Monopoly" and AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.6; course topic 4.2
  • A monopolist's yearly license fee, a fixed cost, is raised. The firm still earns a profit. What happens to its profit-maximizing price and quantity? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.6 and Wikipedia, "Profit maximization"; course topic 4.2
  • A perfectly competitive industry is taken over by a single firm with the same costs, and entry is blocked. What happens to price and output? Wikipedia, "Monopoly"; course topic 4.2
  • A profit-maximizing monopolist with positive marginal cost operates on which part of its demand curve? Wikipedia, "Monopoly"; course topic 4.2
  • At what quantity does a monopolist maximize profit? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.6; course topic 4.2
  • For a monopolist that charges every buyer the same price, why is marginal revenue less than price? Wikipedia, "Marginal revenue"; course topic 4.2
  • On a monopoly graph with straight-line demand, how does the marginal revenue curve sit against the demand curve? Wikipedia, "Monopoly"; course topic 4.2
  • What makes an industry a natural monopoly? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.7 and Wikipedia, "Natural monopoly"; course topic 4.2
  • Why can a monopoly go on earning economic profit in the long run? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.5; course topic 4.2
  • Why does a single-price monopoly create deadweight loss? Wikipedia, "Deadweight loss"; course topic 4.2

Topic 4.3: Price discrimination 10

  • A firm sells one product to two groups and can keep them apart. Which group does it charge the lower price? Wikipedia, "Price discrimination"; course topic 4.3
  • A monopolist faces a straight-line demand curve that runs from a price of $20 at zero units to $0 at 20 units. Marginal cost is constant at $4 a unit and there is no fixed cost. If the firm could price discriminate perfectly, what quantity would it sell and what profit would it earn? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.9; course topic 4.3
  • A theater sells the same seat to students for less than to other adults. For this to raise profit, what must the theater be able to do? Wikipedia, "Price discrimination"; course topic 4.3
  • How does perfect price discrimination change the deadweight loss of a monopoly? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.9; course topic 4.3
  • Under perfect price discrimination, how much consumer surplus do buyers keep? Wikipedia, "Price discrimination" and AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.9; course topic 4.3
  • What is price discrimination? Wikipedia, "Price discrimination"; course topic 4.3
  • What quantity does a perfectly price-discriminating monopolist produce? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.9; course topic 4.3
  • Why can a wheat farmer in a perfectly competitive market not price discriminate? Wikipedia, "Price discrimination" and AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.8; course topic 4.3
  • Why does a perfectly price-discriminating monopolist produce more than a single-price monopolist with the same demand and costs? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.9; course topic 4.3
  • Why would a firm with market power practice price discrimination? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.8; course topic 4.3

Topic 4.4: Monopolistic competition 12

  • A monopolist and a monopolistically competitive firm both face downward-sloping demand. Why can only the monopolist keep an economic profit in the long run? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.5 and PRD-3.B.10; course topic 4.4
  • A monopolistically competitive firm sells 100 units at $12 each, with an average total cost of $9. What is its economic profit, and what follows in the long run? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.10; course topic 4.4
  • Both a perfectly competitive firm and a monopolistically competitive firm earn zero economic profit in the long run. What is different about the monopolistically competitive firm? Wikipedia, "Monopolistic competition"; course topic 4.4
  • Firms in a monopolistically competitive market are earning economic profit. As new firms enter, what happens to the demand curve of an existing firm? Wikipedia, "Monopolistic competition"; course topic 4.4
  • Firms in a monopolistically competitive market are making losses. What happens as the market moves to long-run equilibrium? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.10; course topic 4.4
  • In long-run equilibrium in monopolistic competition, how does price compare with average total cost and with marginal cost? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.10 and Wikipedia, "Monopolistic competition"; course topic 4.4
  • In long-run equilibrium, how does a monopolistically competitive firm's output compare with the output that minimizes its average total cost? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.10 and Wikipedia, "Monopolistic competition"; course topic 4.4
  • In the short run, what economic profit can a monopolistically competitive firm earn? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.10; course topic 4.4
  • What drives economic profit to zero in the long run in monopolistic competition? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.10; course topic 4.4
  • What gives a firm in monopolistic competition some control over its price? Wikipedia, "Monopolistic competition"; course topic 4.4
  • What is advertising mainly used for by firms in monopolistic competition? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.10; course topic 4.4
  • Why is monopolistic competition allocatively inefficient? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.B.10; course topic 4.4

Topic 4.5: Oligopoly and game theory 17

  • An airline weighs a fare cut on a route it shares with one rival. Why does the rival's likely response matter to the decision? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.C.3 and Wikipedia, "Oligopoly"; course topic 4.5
  • Firms A and B each choose to advertise or not. Payoffs in thousands of dollars, A's first: both advertise, 50 and 40; only A advertises, 70 and 45; only B advertises, 30 and 60; neither advertises, 60 and 50. What is the Nash equilibrium? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.C.6; course topic 4.5
  • Firms A and B each choose to advertise or not. Payoffs in thousands of dollars, A's first: both advertise, 50 and 40; only A advertises, 70 and 45; only B advertises, 30 and 60; neither advertises, 60 and 50. Which firm has a dominant strategy? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.C.5; course topic 4.5
  • Firms X and Y each set a high or a low price. If both go high, each earns $10 million. If both go low, each earns $6 million. If one goes low and the other high, the low-price firm earns $14 million and the high-price firm $3 million. The firms sign an enforceable contract that fines any firm that goes low. Which is the smallest of these fines that makes the high price a dominant strategy for each firm? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.C, learning objective c; course topic 4.5
  • Firms X and Y each set a high or a low price. If both go high, each earns $10 million. If both go low, each earns $6 million. If one goes low and the other high, the low-price firm earns $14 million and the high-price firm $3 million. What is firm X's dominant strategy? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.C.5; course topic 4.5
  • Firms X and Y each set a high or a low price. If both go high, each earns $10 million. If both go low, each earns $6 million. If one goes low and the other high, the low-price firm earns $14 million and the high-price firm $3 million. What is the Nash equilibrium? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.C.6; course topic 4.5
  • Firms X and Y each set a high or a low price. If both go high, each earns $10 million. If both go low, each earns $6 million. If one goes low and the other high, the low-price firm earns $14 million and the high-price firm $3 million. Why is this game a prisoner's dilemma? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.C.7 and Wikipedia, "Prisoner's dilemma"; course topic 4.5
  • How do price and quantity in an oligopoly usually compare with those of a perfectly competitive market? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.C.7; course topic 4.5
  • In game theory, what does the normal form of a game show? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.C.4 and Wikipedia, "Normal-form game"; course topic 4.5
  • Two firms each pick one of two technical standards. Each earns $5 million if they pick the same standard and nothing if they differ. How many of the four possible outcomes are Nash equilibria? Wikipedia, "Nash equilibrium"; course topic 4.5
  • Two firms in a duopoly agree to hold output down. Each then secretly produces more than it agreed. What happens to the market price and to their combined profit? Wikipedia, "Cartel" and AP Microeconomics Course and Exam Description, essential knowledge PRD-3.C.7; course topic 4.5
  • What is a duopoly? Wikipedia, "Duopoly"; course topic 4.5
  • What is a Nash equilibrium? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.C.6 and Wikipedia, "Nash equilibrium"; course topic 4.5
  • When does a player have a dominant strategy? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.C.5 and Wikipedia, "Strategic dominance"; course topic 4.5
  • Which description fits an oligopoly? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.C.1 and Wikipedia, "Oligopoly"; course topic 4.5
  • Why are oligopolists tempted to collude? AP Microeconomics Course and Exam Description, essential knowledge PRD-3.C.2 and Wikipedia, "Cartel"; course topic 4.5
  • Why do cartel agreements tend to break down? Wikipedia, "Cartel"; course topic 4.5

How this list was compiled: Our own questions, written to Unit 4 (Imperfect Competition) of the College Board's AP Microeconomics Course and Exam Description, effective fall 2026, https://apcentral.collegeboard.org/media/pdf/ap-microeconomics-course-and-exam-description.pdf, read 2026-10-11. Every numeric answer is worked from the numbers the question prints and was worked out a second time on 2026-10-11. The principle behind each answer was read on 2026-10-11 in the essential knowledge statement of the course description or the Wikipedia article named under the question. Licence: Own work. Short quotations from the public documents named under each question.

How it works

This AP Econ imperfect competition practice test has 64 questions of our own on Unit 4 of AP Microeconomics, from monopoly to game theory. It is unofficial and not affiliated with the College Board, the owner of AP.

Read the full guide

What Unit 4 covers

The College Board's course description, read October 11, 2026, gives Unit 4, Imperfect Competition, five topics and no weights among them, so the spread is ours: imperfectly competitive markets (9 questions), monopoly (16), price discrimination (10), monopolistic competition (12), and oligopoly and game theory (17). As the description requires, every game has two players with two actions each.

Graphs and tables in words

A question states its numbers in a sentence: a demand line by its end points, a game by its four outcomes. Every numeric answer was worked twice. Under each answer is the line of the course description or the Wikipedia article where the principle can be read.

  • Every firm maximizes profit where MR = MC. What changes with the market structure is the price that quantity sells for.
  • In a game, find each player's best reply to each move of the other. An outcome where both are best replies is a Nash equilibrium.
  • Long-run profit is zero where entry is free, as in monopolistic competition. Barriers to entry let a monopoly keep it.

Questions and answers

What is Unit 4 in AP Microeconomics?

Imperfect Competition. Its five topics are an introduction to imperfectly competitive markets, monopoly, price discrimination, monopolistic competition, and oligopoly and game theory.

How much of the AP Micro exam is imperfect competition?

Unit 4 carries 15 to 22% of the multiple-choice section, by the College Board's course page. That section has 60 questions in 1 hour 10 minutes.

Is game theory on the AP Microeconomics exam?

Yes, within limits. The course description keeps to games of two players with two actions each, and puts mixed strategies and extensive-form games beyond the scope of the exam.

Does this work as an AP Microeconomics Unit 4 imperfect competition study guide?

As a self-check beside your notes, yes. The questions are grouped by the unit's five topics, and each explanation states the rule in a sentence or two.

Are these real AP Microeconomics exam questions?

No. The College Board owns the real questions, and none appears here, even in other words. Every question was written for this page from the unit's published content.

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