Question 1

Which of the following is NOT a necessary condition for a monopoly to arise in a market?

Accepted Answer

The firm faces a perfectly elastic demand curve

Question 2

A natural monopoly occurs when:

Accepted Answer

A single firm can produce the entire market output at a lower cost than multiple firms due to economies of scale

Question 3

Suppose a monopoly faces the inverse demand function $$p = 24 - Q. $$What is the marginal revenue function for this monopoly?

Accepted Answer

$$MR = 24 - 2Q$$

Question 4

Which of the following best describes the difference between perfect competition and monopoly in terms of price and output?

Accepted Answer

Monopoly produces less output at a higher price than perfect competition

Question 5

A single-price monopoly maximizes profit by producing the quantity at which:

Accepted Answer

$$MR = MC$$

Question 6

If a monopoly faces a demand curve that is inelastic at the current price, what should the firm do to increase its economic profit?

Accepted Answer

Decrease output to make demand more elastic

Question 7

Which of the following is an example of a legal barrier to entry?

Accepted Answer

A government patent granted for a new invention

Question 8

Consider a monopoly with total revenue $$TR = P 	imes Q$$ and marginal revenue $$MR = \Delta TR / \Delta Q. If $$the price falls from $$32 to$$ $$28$$ and quantity sold increases from $$2 to$$ $$3$$, what is the marginal revenue for the third unit?

Accepted Answer

$$MR = 20$$

Question 9

Which of the following statements about price discrimination is TRUE?

Accepted Answer

Price discrimination allows a monopoly to capture more consumer surplus and increase profit

Question 10

Suppose a government regulates a monopoly by setting the price equal to marginal cost. What is the likely effect on deadweight loss?

Accepted Answer

Deadweight loss is eliminated

Question 11

If a monopoly perfectly price discriminates, what happens to consumer surplus and total surplus?

Accepted Answer

Consumer surplus is zero and total surplus is maximized

Question 12

Which of the following is a key difference between a single-price monopoly and perfect competition regarding efficiency?

Accepted Answer

Perfect competition is efficient because $$MSB = MSC$$, while monopoly creates deadweight loss

Question 13

A monopoly faces the demand curve $$p = 24 - Q$$ and has a constant marginal cost of $$MC = 8. $$What is the profit-maximizing quantity?

Accepted Answer

$$Q = 4$$

Question 14

Which of the following is NOT a type of barrier to entry that can create a monopoly?

Accepted Answer

Technological barriers that make the demand curve horizontal

Question 15

In a single-price monopoly, why does the marginal revenue curve lie below the demand curve?

Accepted Answer

Because the monopoly must lower the price on all units sold to sell an additional unit

Question 16

Which of the following is a real-world example of a natural monopoly?

Accepted Answer

A local water utility company

Question 17

If a monopoly faces a linear demand curve and its marginal revenue curve has twice the slope of the demand curve, which equation correctly represents the marginal revenue if the demand is $$p = a - bQ$$?

Accepted Answer

$$MR = a - 2bQ$$

Question 18

Which of the following is a potential problem with government regulation of monopoly prices?

Accepted Answer

Regulated firms may bribe or influence regulators

Question 19

Which of the following statements about group price discrimination is correct?

Accepted Answer

A firm charges different prices to different groups, but the same price within each group

Question 20

In the context of monopoly, what is the economic effect of rent-seeking behavior?

Accepted Answer

It leads to additional inefficiency and waste of resources

Monopoly: Structure, Pricing, and Efficiency in Microeconomics

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