#1
In a monopoly market structure, how many firms dominate the market?
One
ExplanationMonopoly market is dominated by a single firm.
#2
What is the primary characteristic of a monopoly?
Single seller
ExplanationA monopoly is characterized by having only one seller.
#3
Which of the following is a barrier to entry in a monopoly market?
Government regulations
ExplanationGovernment regulations can restrict entry into a monopoly market.
#4
How does a monopoly affect consumer surplus compared to perfect competition?
Decreases consumer surplus
ExplanationMonopoly reduces consumer surplus compared to perfect competition.
#5
Which of the following is a characteristic of price discrimination in a monopoly?
Charging different prices to different groups of consumers
ExplanationPrice discrimination in monopoly involves charging varied prices to different consumer groups.
#6
Which government policy might be implemented to regulate a monopoly?
Anti-trust laws
ExplanationAnti-trust laws are implemented to regulate monopolies.
#7
What factor contributes to the natural monopoly market structure?
Economies of scale favoring a single large producer
ExplanationNatural monopoly arises due to economies of scale favoring one large producer.
#8
What is the Deadweight Loss in a monopoly market?
The loss of consumer surplus and producer surplus
ExplanationDeadweight Loss in monopoly refers to the loss of consumer and producer surplus.
#9
What is the relationship between a monopoly and allocative efficiency?
Monopoly never achieves allocative efficiency
ExplanationMonopoly never allocates resources efficiently.
#10
What is the main criticism of monopolies from a social welfare perspective?
They reduce overall economic welfare
ExplanationMonopolies decrease overall economic welfare.
#11
How does a monopoly maximize its profit in the short run?
Setting marginal cost equal to marginal revenue
ExplanationMonopoly maximizes short-run profit by equating marginal cost and marginal revenue.
#12
What is a potential disadvantage of a natural monopoly?
Monopoly pricing leading to reduced consumer surplus
ExplanationNatural monopolies may lead to reduced consumer surplus due to monopoly pricing.