#1
In monopolistic competition, firms have:
Low barriers to entry
ExplanationFirms in monopolistic competition face minimal obstacles for new businesses to enter the market.
#2
Which of the following is a characteristic of a monopoly market structure?
A single firm with complete control over the market
ExplanationA monopoly market structure is defined by a single firm dominating and having absolute control over the entire market.
#3
What is a monopolistic market characterized by?
A single seller with a unique product
ExplanationA monopolistic market is characterized by a single seller offering a unique product.
#4
What is the main difference between a monopoly and an oligopoly?
Number of firms in the market
ExplanationThe primary distinction between a monopoly and an oligopoly lies in the number of firms operating in the market.
#5
Which of the following is NOT a characteristic of a monopoly?
Price taker
ExplanationMonopolies are not price takers; they have the power to set prices in the market.
#6
What is a common barrier to entry in a monopoly market?
Government regulation
ExplanationGovernment regulation is a common barrier to entry in a monopoly market.
#7
What does MR stand for in the context of monopoly profit maximization?
Marginal Revenue
ExplanationMR, or Marginal Revenue, is the additional revenue generated from selling one more unit of a product in monopoly profit maximization.
#8
In a monopoly, at the profit-maximizing level of output, what is the relationship between marginal revenue (MR) and marginal cost (MC)?
MR = MC
ExplanationIn a monopoly, profit is maximized when the Marginal Revenue (MR) equals Marginal Cost (MC).
#9
What is the profit-maximizing rule for a monopolist?
Produce where marginal cost equals marginal revenue
ExplanationA monopolist maximizes profit by producing where marginal cost equals marginal revenue.
#10
Which of the following is a potential consequence of monopolies in a market?
Decreased consumer choice
ExplanationMonopolies can lead to decreased consumer choice in the market.
#11
What does the term 'deadweight loss' refer to in the context of monopolies?
The loss of efficiency in the market due to monopoly power
ExplanationDeadweight loss in monopolies refers to the inefficiency caused by the exercise of monopoly power in the market.
#12
Which of the following is a characteristic of perfect competition but not monopoly?
Many buyers and sellers
ExplanationPerfect competition is characterized by the presence of many buyers and sellers, unlike the singular dominance of a monopoly.
#13
Which of the following is NOT a strategy for a monopolist to maintain its market power?
Limiting output to decrease costs
ExplanationLimiting output to decrease costs is not a strategy employed by monopolists to maintain market power.
#14
What is a natural monopoly?
A monopoly that results from economies of scale, making it most efficient for one firm to produce the entire output
ExplanationA natural monopoly arises from economies of scale, where it's most efficient for a single firm to produce the entire output.
#15
Which of the following statements regarding monopolies is true?
Monopolies may engage in price discrimination to increase profits
ExplanationMonopolies may use price discrimination as a strategy to enhance their profits.
#16
What is the primary goal of antitrust laws in the context of monopolies?
To prevent the formation and abuse of monopoly power
ExplanationAntitrust laws aim to prevent the creation and misuse of monopoly power in markets.
#17
What happens to a monopolist's demand curve compared to the market demand curve?
It is flatter than the market demand curve
ExplanationA monopolist's demand curve is flatter than the market demand curve.
#18
Which of the following is a potential solution to the problems associated with monopolies?
Regulation
ExplanationRegulation is a potential solution to address issues associated with monopolies.