What Do You Know About Monopoly? Quiz

15 Questions | Total Attempts: 163

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What Do You Know About Monopoly? Quiz - Quiz

Micro Economics CIA 3


Questions and Answers
  • 1. 
    Monopolists are price takers
    • A. 

      True

    • B. 

      False

  • 2. 
    A monopoly is the sole seller of a product with no close substitutes 
    • A. 

      True

    • B. 

      False

  • 3. 
    The demand curve facing a monopolist is the market demand curve for its product
    • A. 

      True

    • B. 

      False

  • 4. 
    For the monopolist, marginal revenue is always less than the price of the good
    • A. 

      True

    • B. 

      False

  • 5. 
    Price discrimination is only possible if there is no arbitrage
    • A. 

      True

    • B. 

      False

  • 6. 
    Price discrimination can raise economic welfare because output increases beyond that which would result under monopoly pricing
    • A. 

      True

    • B. 

      False

  • 7. 
    Universities are engaging in price discrimination when they charge different levels of tuition to poor and wealthy students
    • A. 

      True

    • B. 

      False

  • 8. 
    Which of the following is not a barrier to entry in a monopolized market? 
    • A. 

      The government gives a single firm the exclusive right to produce some good

    • B. 

      The cost of production make a single producer more efficient than a large number of producers

    • C. 

      A key resource is owned by a single firm

    • D. 

      A single firm is very large

  • 9. 
    A monopolist maximizes profit by producing the quantity at which
    • A. 

      Marginal revenue equals marginal cost

    • B. 

      Marginal revenue equals price

    • C. 

      Marginal cost equals price

    • D. 

      Marginal cost equals demand

    • E. 

      None of the above occurs

  • 10. 
    The inefficiency associated with monopoly is due to 
    • A. 

      The monopoly's profits

    • B. 

      The monopoly's losses

    • C. 

      Overproduction of the good

    • D. 

      Underproduction of the good

  • 11. 
    Compared to a perfectly competitive market, a monopoly market will usually generate
    • A. 

      Higher prices and higher output

    • B. 

      Higher prices and lower output

    • C. 

      Lower prices and lower output

    • D. 

      Lower prices and higher output

  • 12. 
    The monopolist's supply curve
    • A. 

      Is the marginal-cost curve above average variable cost

    • B. 

      Is the marginal-cost curve above average total cost

    • C. 

      Is the upward-sloping portion of the average-total cost curve

    • D. 

      Is the upward-sloping portion of the average variable cost

    • E. 

      Does not exist

  • 13. 
    Which of the following statements about price discrimination is not true?
    • A. 

      Price discrimination can raise economic welfare

    • B. 

      Price discrimination requires that the seller be able to separate buyers according to their willingness to pay

    • C. 

      Perfect price discrimination generates a deadweight loss

    • D. 

      Price discrimination increases a monopolist's profits

    • E. 

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

  • 14. 
    A monopoly is able to continue to generate economic profits in the long run because
    • A. 

      Potential competitors sometimes don't notice the profits

    • B. 

      There is some barrier to entry to that market

    • C. 

      The monopolist is financially powerful

    • D. 

      Antitrust laws eliminate competitors for a specified number of years

    • E. 

      Of all of the above

  • 15. 
    The supply curve for a monopolist is always positively sloped
    • A. 

      True

    • B. 

      False

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