Question 1

Which of the following is the fundamental cause of monopoly according to the study materials?

Accepted Answer

Barriers to entry

Question 2

A pharmaceutical company discovers a new drug and applies for a patent. This is an example of which type of barrier to entry?

Accepted Answer

Exclusive right granted by government

Question 3

Which of the following is an example of a natural monopoly?

Accepted Answer

Cable TV service

Question 4

How does a monopolist determine the profit-maximizing level of output?

Accepted Answer

Where marginal revenue equals marginal cost

Question 5

If a monopolist wants to sell more units, what happens to the price?

Accepted Answer

Price falls

Question 6

At the profit-maximizing output for a monopolist, if $$MR = MC = 5$$ and the market price is $$25$$, what is the quantity produced?

Accepted Answer

$$100$$

Question 7

Compared to perfect competition, a monopoly will:

Accepted Answer

Produce less and charge a higher price

Question 8

What is deadweight loss in the context of monopoly?

Accepted Answer

A measure of inefficiency from monopoly

Question 9

In a perfectly competitive market, consumer surplus is represented by which area?

Accepted Answer

Area C + R + D

Question 10

Which condition is NOT required for a firm to successfully price discriminate?

Accepted Answer

Resale is possible

Question 11

Suppose an airline charges $$150 for students and 550 $$for business travelers for the same ticket. What concept does this illustrate?

Accepted Answer

Price discrimination

Question 12

Which group is charged a higher price under price discrimination?

Accepted Answer

The group with less elastic demand

Question 13

If a monopolist faces the entire market demand curve, what does this imply about its pricing power?

Accepted Answer

It can set the market price

Question 14

Which formula correctly represents the profit-maximizing rule for a monopolist?

Accepted Answer

$$MR = MC$$

Question 15

Why is the monopolist’s marginal revenue curve always below the demand curve?

Accepted Answer

Because the monopolist must lower the price to sell additional units

Question 16

If a monopolist produces 100 units at a price of $$25, but a perfectly competitive market would produce 200 units at a price of 5$$, what is the effect on consumer surplus?

Accepted Answer

Consumer surplus decreases under monopoly

Question 17

Which of the following best describes the area labeled 'D' in the context of monopoly and perfect competition?

Accepted Answer

Deadweight loss

Question 18

A single vendor obtains a license to sell at a football game. What type of market structure does this create?

Accepted Answer

Monopoly

Question 19

Which of the following is NOT an example of a natural monopoly?

Accepted Answer

Smartphone manufacturing

Question 20

If a firm can prevent resale and has market power, what is the likely outcome if consumer groups differ in willingness to pay?

Accepted Answer

The firm will engage in price discrimination

CHAPTEr 10:Monopoly and Price Discrimination: Key Concepts in Microeconomics

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