Question 1

Which of the following is NOT a typical barrier to entry that allows a monopoly to exist?

Accepted Answer

Perfect information among consumers

Question 2

Suppose a monopoly faces a daily demand function $P = 700 - 2q$ and a marginal cost function $MC = 6q$. What is the profit-maximizing quantity?

Accepted Answer

$q = 70$

Question 3

For a monopoly, which of the following relationships always holds at the profit-maximizing output?

Accepted Answer

$MR = MC$

Question 4

A natural monopoly occurs when:

Accepted Answer

The minimum efficient scale is larger than the quantity demanded by consumers

Question 5

If a monopoly sets a price above average total cost ($P > ATC$), what is the result?

Accepted Answer

The firm earns a profit per unit

Question 6

Which of the following is a necessary condition for price discrimination to be effective?

Accepted Answer

The firm must be able to prevent resale of the product

Question 7

What is the deadweight loss in monopoly primarily caused by?

Accepted Answer

The monopoly produces less than the socially efficient quantity

Question 8

Which of the following best describes third-degree (multi-market) price discrimination?

Accepted Answer

Charging different prices to different market segments based on observable characteristics

Question 9

A monopoly's demand curve is:

Accepted Answer

The same as the market demand curve

Question 10

If a government imposes a price ceiling on a monopoly at the competitive level, what is the likely outcome?

Accepted Answer

Consumer surplus increases and the market becomes more efficient

Question 11

Which formula correctly expresses the profit per unit for a monopoly?

Accepted Answer

$\frac{\pi}{q} = P - ATC$

Question 12

Which of the following is an example of a two-part tariff?

Accepted Answer

A gym charging a membership fee plus a fee per visit

Question 13

Why do monopolies typically not achieve production efficiency?

Accepted Answer

The profit-maximizing quantity is usually not at the minimum efficient scale

Question 14

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

Accepted Answer

A state-owned water utility

Question 15

What is the effect of a licensing fee on a monopoly's cost curves?

Accepted Answer

It increases average total cost but does not affect marginal cost

Question 16

Which of the following is true about perfect (first-degree) price discrimination?

Accepted Answer

Each consumer is charged their exact willingness to pay

Question 17

A monopoly faces the following cost and demand functions: $P = 700 - 2q$, $MC = 6q$, $ATC = \frac{8000}{q} + 3q$. What is the profit at the profit-maximizing quantity?

Accepted Answer

$\$16,500$

Question 18

Which of the following is a potential downside of price matching (low price guarantee) strategies?

Accepted Answer

It can enforce collusion and reduce price competition

Question 19

Which government policy is designed to prevent the formation of monopolies through mergers?

Accepted Answer

Antitrust laws

Question 20

Which of the following is true about monopoly pricing compared to perfect competition?

Accepted Answer

Monopoly price is higher and quantity is lower than in perfect competition

Monopoly and Competition Policy: Microeconomics Study Notes

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