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Monopoly MCQs

Option A: charging different prices on the basis of race

Option B: charging different prices for goods with different costs of production

Option C: charging different prices based on cost-of-service differences

Option D: selling a certain product of given quality and cost per unit at different prices to different buyers

Correct Answer: selling a certain product of given quality and cost per unit at different prices to different buyers


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Option A: charge a higher price

Option B: produce a lower quantity of the product

Option C: make a greater amount of economic profit

Option D: all of the above

Correct Answer: all of the above


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Option A: the price is greater than the marginal revenue

Option B: the price is less than the marginal revenue

Option C: there is no relation

Option D: they are equal

Correct Answer: the price is greater than the marginal revenue


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Option A: increase should

Option B: decrease output

Option C: keep output the same because profits are maximized when marginal revenue exceeds marginal cost

Option D: raise the price

Correct Answer: increase should


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Option A: will rise

Option B: will fall

Option C: will remain the same

Option D: could either rise or fall depending on the elasticity of the monopolist’s supply curve

Correct Answer: will rise


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Option A: tends to be inefficient.

Option B: usually lowers the cost of production dramatically.

Option C: creates synergies between the newly acquired firm and other government-owned companies.

Option D: does none of the things described in these answers

Correct Answer: tends to be inefficient.


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Option A: Cause the monopolist to exit the market

Option B: improve efficieny

Option C: raise the price of good

Option D: attract additional firms to enter the market

Correct Answer: Cause the monopolist to exit the market


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Option A: higher prices and lower output

Option B: higher prices and higher output

Option C: lower prices and lower output

Option D: lower prices and higher output

Correct Answer: higher prices and lower output


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Option A: marginal revenue equals marginal cost

Option B: marginal revenue equals price

Option C: marginal cost equals price

Option D: marginal cost equals demand

Correct Answer: marginal revenue equals marginal cost


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Option A: natural monopoly

Option B: perfect competitor

Option C: government monopoly

Option D: regulated monopoly

Correct Answer: natural monopoly


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Option A: Bans monopolies

Option B: Fines all monopolies

Option C: Prevents firms acquiring more than 25% of the market

Option D: Has the right to investigate monopolies and will assess each one on its own merits

Correct Answer: Has the right to investigate monopolies and will assess each one on its own merits


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Option A: Monopolies are inefficient

Option B: Monopoly profits ac as an incentive for innovation

Option C: Monopolies are alocatively efficient

Option D: Monopolies are productively efficient

Correct Answer: Monopoly profits ac as an incentive for innovation


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Option A: Products are differentiated

Option B: There is freedom of entry and exit into the industry in the long run

Option C: The firm is a price taker

Option D: There is one main sellers

Correct Answer: There is freedom of entry and exit into the industry in the long run


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Option A: The firm is Productively efficient

Option B: The firm is allocatively inefficient

Option C: The firm produces where marginal cost is less than marginal revenue

Option D: The firm produces at the socially optimal level

Correct Answer: The firm is allocatively inefficient


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Option A: Equals the demand curve

Option B: Is parallel with the demand curve

Option C: Lies below and converges with the demand curve

Option D: Lies below and diverges from the demand curve

Correct Answer: Lies below and diverges from the demand curve


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Option A: The section with the richest people

Option B: The section with the oldest people

Option C: The section with the most inelastic demand

Option D: The section with the most elastic demand

Correct Answer: The section with the most inelastic demand


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Option A: some degree of monopoly power

Option B: an ability to separate the market

Option C: an ability to prevent reselling

Option D: all of the above

Correct Answer: all of the above


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Option A: economies of scale

Option B: a high proportion of the total cost in the cost of capital goods

Option C: the market is very small

Option D: all of the above

Correct Answer: all of the above


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Option A: 1

Option B: 2

Option C: 3

Option D: 4

Correct Answer: 3


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Option A: marginal revenue equals average total cost

Option B: Price equals marginal revenue

Option C: marginal revenue equals marginal cost

Option D: total revenue equals total cost

Correct Answer: marginal revenue equals marginal cost


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Option A: One seller of the product

Option B: low barriers to entry

Option C: close substitute products

Option D: perfect information

Correct Answer: One seller of the product


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Option A: there is some barrier to entry to that market

Option B: Potential competitors sometimes don’t notice the the profits.

Option C: the monopolist is financially powerful.

Option D: antitrust laws eliminate competitors for a specified number of years.

Correct Answer: there is some barrier to entry to that market


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Option A: Perfect price discrimination generates a deadweight loss

Option B: Price discrimination can raise economic welfare.

Option C: price discrimination requires that seller be able to separate buyers according to their willingness to pay.

Option D: Price discrimination increases a monopolist’s profits.

Correct Answer: Perfect price discrimination generates a deadweight loss


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Option A: Increase competition in an industry by preventing mergers and breaking up large firms.

Option B: regulate the prices charged by a monopoly

Option C: increase merger activity to help generate synergies that reduce costs and raise efficiency.

Option D: create public ownership of natural monopolies

Correct Answer: Increase competition in an industry by preventing mergers and breaking up large firms.


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Option A: does not exist

Option B: is the marginal cost curve above average variable cost?

Option C: is the marginal cost curve above average total cost

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

Correct Answer: does not exist


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Option A: underproduction of the good

Option B: the monopoly’s profits

Option C: the monopoly’s losses

Option D: overproduction of the good

Correct Answer: underproduction of the good


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Option A: Thomson has a legally protected exclusive right to produce this textbook

Option B: Thomson owns a key resource in the production of textbooks.

Option C: Thomson is a natural monopoly,

Option D: Thomson is a very large company

Correct Answer: Thomson has a legally protected exclusive right to produce this textbook


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Option A: In competitive markets, price equals marginal cost, in monopolized markets price exceeds marginal cost.

Option B: In competitive markets price equals marginal cost, in monopolized markets price equals marginal cost

Option C: In competitive markets price exceeds marginal cost, in monopolized markets price exceeds marginal cost

Option D: In competitive markets price exceeds marginal cost in monopolized markets price equals marginal cost

Correct Answer: In competitive markets, price equals marginal cost, in monopolized markets price exceeds marginal cost.


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Option A: below the price because the price effect outweighs the output effect

Option B: above the price because the output effect outweighs the price effect

Option C: above the price because the price effect outweighs the output effect

Option D: below the price because the output effect outweighs the price effect

Correct Answer: below the price because the price effect outweighs the output effect


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Option A: A single firm is very large

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

Option C: The costs of production make a single producer more efficient than a large number of productions

Option D: A key resource is owned by a single firm

Correct Answer: A single firm is very large


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Option A: The price is greater than the marginal cost

Option B: The price is greater than the marginal benefit

Option C: The price is greater than the average revenue

Option D: The price is greater than the marginal revenue

Correct Answer: The price is greater than the marginal cost


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Option A: There are many buyers and sellers

Option B: There is one main buyer

Option C: There is one main seller

Option D: The actions of one firm do not affect the market price and quantity

Correct Answer: There is one main seller


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Option A: Patents

Option B: Internal economies of scale

Option C: Mobility of resources

Option D: High investment costs

Correct Answer: Mobility of resources


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Option A: The price set is greater than the marginal cost

Option B: The price is less than the average cost

Option C: The average revenue equals the marginal cost

Option D: Revenue equals total cost

Correct Answer: The price set is greater than the marginal cost


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Option A: The price is greater than the marginal cost

Option B: The price is greater than the average cost

Option C: Costs are higher than they could be due to a lack of competitive pressure

Option D: There are external cost

Correct Answer: Costs are higher than they could be due to a lack of competitive pressure


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