#1
Which characteristic defines a monopoly market structure?
Single seller and many buyers
ExplanationMonopoly: Single seller dominates market, many buyers.
#2
Which government body is often responsible for regulating monopolies to prevent anti-competitive behavior?
Federal Trade Commission (FTC)
ExplanationFTC: Regulates monopolies, prevents anti-competitive actions.
#3
Which type of monopoly occurs when a single firm dominates the entire production process of a good or service?
Vertical monopoly
ExplanationVertical Monopoly: Controls entire production process.
#4
In a natural monopoly, what factor contributes to lower average costs as production scales up?
Economies of scale
ExplanationNatural Monopoly: Cost efficiencies with scale.
#5
What is a strategic barrier to entry that may be employed by a monopolist?
High production costs
ExplanationMonopoly: High costs deter competitors.
#6
What is a key feature of a monopoly market regarding entry and exit?
Difficult entry and exit
ExplanationMonopoly: Barriers make entry and exit hard.
#7
Which pricing strategy is commonly associated with a monopoly?
Price discrimination
ExplanationMonopoly: Charges different prices to different customers.
#8
What is a natural monopoly, and what industry is commonly associated with it?
A monopoly arising from economies of scale
ExplanationNatural Monopoly: Scale economies lead to single provider.
#9
Which pricing strategy involves setting a low initial price to attract customers and gain market share quickly?
Penetration pricing
ExplanationPenetration Pricing: Sets low entry price to capture market.
#10
What is the term for a situation where a monopoly firm charges different prices for the same product to different customers based on their willingness to pay?
Price discrimination
ExplanationPrice Discrimination: Varies prices based on customer willingness to pay.
#11
What is the primary barrier to entry in a monopoly market?
High initial investment
ExplanationMonopoly: High investment needed, inhibits entry.
#12
In a monopoly, what happens to the elasticity of demand for the monopolist's product?
Elasticity decreases
ExplanationMonopoly: Demand becomes less sensitive to price changes.
#13
What is a potential disadvantage of monopolies for consumers?
Limited choice and higher prices
ExplanationMonopoly: Limits choice, leads to higher prices.
#14
How does a monopoly impact the incentive for innovation compared to a competitive market?
Discourages innovation
ExplanationMonopoly: Less competition, less drive for innovation.
#15
What is the main goal of a monopolist when practicing price discrimination?
Maximizing total revenue
ExplanationMonopoly: Aims to maximize overall revenue.