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monopoly MCQs

Practise focused monopoly questions with marked answers for exam preparation and subject revision.

monopoly Mcqs
1. In price discrimination, which section of the market is charged the higher price ?
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A. The section with the richest people

B. The section with the most elastic demand

C. The section with the most inelastic demand

D. The section with the oldest people

2. When a monopolist produces an additional unit, the marginal revenue generated by that unit must be ?
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A. below the price because the price effect outweighs the output effect

B. below the price because the output effect outweighs the price effect

C. above the price because the output effect outweighs the price effect

D. above the price because the price effect outweighs the output effect

3. A monopoly is able to continue to generate economic profits in the long run because ?
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A. Potential competitors sometimes dont notice the the profits.

B. the monopolist is financially powerful.

C. of all of the things described in these answers

D. there is some barrier to entry to that market

E. antitrust laws eliminate competitors for a specified number of years.

4. The monopolists supply curve ?
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A. is the marginal cost curve above average total cost

B. is the marginal cost curve above average variable cost?

C. does not exist

D. is the upward-sloping portion of the average total cost curve

E. The upward-sloping portion of the average variable cost

5. Barriers to entry do not include ?
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A. High investment costs

B. Internal economies of scale

C. Mobility of resources

D. Patents

6. Compared to a perfectly competitive market a monopoly market will usually generate ?
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A. lower prices and lower output

B. higher prices and lower output

C. higher prices and higher output

D. lower prices and higher output

7. In the UK the government ?
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A. Bans monopolies

B. Fines all monopolies

C. Prevents firms acquiring more than 25% of the market

D. Has the right to investigate monopolies and will assess each one on its own merits
8. In monopoly when abnormal profits are made ?
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A. The average revenue equals the marginal cost

B. Revenue equals total cost

C. The price set is greater than the marginal cost

D. The price is less than the average cost

9. Which of the follow statements about price discrimination is not true ?
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A. Price discrimination increases a monopolists profits.

B. Perfect price discrimination generates a deadweight loss

C. For a monopolist to engage in price discrimination buyers must be unable to engage in arbitrage.

D. Price discrimination can raise economic welfare.

E. price discrimination requires that seller be able to separate buyers according to their willingness to pay.

10. In order to practice price discrimination which of the following is needed ?
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A. an ability to separate the market

B. all of the above

C. some degree of monopoly power

D. an ability to prevent reselling

11. According to Schumpeter ?
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A. Monopolies are productively efficient

B. Monopolies are alocatively efficient

C. Monopolies are inefficient

D. Monopoly profits ac as an incentive for innovation
12. Public ownership of natural monopolies ?
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A. creates synergies between the newly acquired firm and other government-owned companies.

B. tends to be inefficient.

C. usually lowers the cost of production dramatically.

D. does none of the things described in these answers

13. This monopolist should produce ?
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A. 2

B. 1

C. 4

D. 5

E. 3
14. In monopoly in long run equilibrium ?
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A. The firm produces at the socially optimal level

B. The firm is allocatively inefficient

C. The firm is Productively efficient

D. The firm produces where marginal cost is less than marginal revenue

15. X inefficiency occurs when ?
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A. The price is greater than the average cost

B. Costs are higher than they could be due to a lack of competitive pressure

C. There are external cost

D. The price is greater than the marginal cost

16. A welfare loss occurs in monopoly where ?
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A. The price is greater than the average revenue

B. The price is greater than the marginal benefit

C. The price is greater than the marginal cost

D. The price is greater than the marginal revenue

17. Compared to the case of perfect competition, a monopolist is more likely to ?
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A. produce a lower quantity of the product

B. make a greater amount of economic profit

C. all of the above

D. charge a higher price

18. Which of the following statements about price and marginal cost in competitive and monopolized markets is true ?
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A. In competitive markets price equals marginal cost, in monopolized markets price equals marginal cost

B. In competitive markets price exceeds marginal cost in monopolized markets price equals marginal cost

C. In competitive markets, price equals marginal cost, in monopolized markets price exceeds marginal cost.

D. In competitive markets price exceeds marginal cost, in monopolized markets price exceeds marginal cost

19. In order to maximize profits, a monopoly company will produce that quantity at which the ?
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A. Price equals marginal revenue

B. total revenue equals total cost

C. marginal revenue equals average total cost

D. marginal revenue equals marginal cost
20. Using government regulations to force a natural monopoly to charge a price equal to his marginal cost will ?
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A. raise the price of good

B. Cause the monopolist to exit the market

C. attract additional firms to enter the market

D. improve efficieny