#1
Which of the following best describes a monopoly market structure?
A single firm selling a unique product with no close substitutes
ExplanationCharacterized by exclusive control over a market, offering a product without substitutes.
#2
What is a characteristic of a monopoly market?
Barriers to entry
ExplanationPresence of obstacles preventing new competitors from entering the market.
#3
What is an example of a real-world monopoly?
The diamond industry
ExplanationExclusive control over the market for diamonds.
#4
Which of the following is a characteristic of a perfectly competitive market?
Products are homogeneous
ExplanationAll products are identical in a perfectly competitive market.
#5
What is a key feature of a monopoly market structure?
Existence of barriers to entry
ExplanationExclusive control is maintained through obstacles hindering market entry.
#6
Which of the following is a characteristic of a monopoly market?
Unique product with no close substitutes
ExplanationMonopolies offer products without close alternatives.
#7
In a monopoly market, the demand curve faced by the firm is:
Downward-sloping
ExplanationAs output increases, the price decreases, reflecting the firm's market power.
#8
Which of the following is a potential disadvantage of a monopoly market?
Higher prices for consumers
ExplanationConsumers may face elevated prices due to limited competition.
#9
What is a natural monopoly?
A monopoly that arises from economies of scale over a large range of output
ExplanationEfficiency leads to a single firm dominating the market.
#10
Which of the following is NOT a barrier to entry in a monopoly market?
#11
What is the primary goal of antitrust laws in relation to monopolies?
To promote competition and prevent abuse of market power
ExplanationAntitrust laws aim to ensure fair competition and prevent monopolistic abuses.
#12
Which of the following is a characteristic of monopolistic competition?
Product differentiation
ExplanationFirms differentiate products to gain a competitive edge.
#13
What strategy might a monopolist employ to maximize profits?
Increase output until marginal revenue equals marginal cost
ExplanationProfit maximization occurs when additional output's revenue equals its cost.
#14
What is a potential consequence of a monopolist engaging in price discrimination?
Reduction in market efficiency
ExplanationUnequal pricing can lead to a less efficient allocation of resources.
#15
What is the profit-maximizing level of output for a monopolistically competitive firm in the short run?
Where price exceeds marginal cost
ExplanationProfit is maximized when selling price is higher than marginal cost.
#16
Which of the following is a characteristic of a contestable market?
Low barriers to entry and exit
ExplanationEasy entry and exit for firms, promoting competition.
#17
In a monopoly, what happens to the firm's marginal revenue as it increases output?
Marginal revenue decreases
ExplanationThe more output a monopoly produces, the less each additional unit contributes to revenue.
#18
What is a potential consequence of government regulation on a natural monopoly?
Promotion of competition
ExplanationRegulation aims to prevent abuse and encourage fair competition.