Question 1

Which of the following best describes a monopoly market structure?

Accepted Answer

A market with a single firm producing a good or service with no close substitutes and protected by barriers to entry.

Question 2

Which of the following is NOT a typical barrier to entry that allows monopolies to arise?

Accepted Answer

Perfect information among buyers and sellers

Question 3

Suppose the demand curve for a monopolist is given by $$P = 100 - Q. $$What is the equation for the marginal revenue (MR) curve?

Accepted Answer

$$MR = 100 - 2Q$$

Question 4

A monopolist faces the demand curve $$P = 15 - 3Q$$ and has a constant marginal cost $$MC = 4. $$What is the profit-maximizing quantity?

Accepted Answer

$$Q = 2$$

Question 5

Compared to perfect competition, a single-price monopoly will:

Accepted Answer

Produce less output and charge a higher price.

Question 6

Which of the following best explains deadweight loss in monopoly markets?

Accepted Answer

It is the loss of total surplus resulting from the monopolist producing less than the efficient output.

Question 7

If a monopolist can perfectly price discriminate, what is the effect on consumer surplus?

Accepted Answer

Consumer surplus is eliminated.

Question 8

Which of the following is an example of price discrimination?

Accepted Answer

An airline charges higher prices for tickets purchased at the last minute compared to tickets bought in advance.

Question 9

Suppose a monopolist faces two groups: Group 1 with demand $$P_1 = 10 - 2Q$ and Group 2 with demand P_2$ = 15 - 3Q. If $$the monopolist price discriminates, which group will pay the higher price?

Accepted Answer

Group 2, because their demand is less elastic.

Question 10

Rent seeking in monopoly markets refers to:

Accepted Answer

The pursuit of economic rent by capturing consumer or producer surplus.

Question 11

Which of the following is a potential downside of government subsidies to natural monopolies?

Accepted Answer

Subsidies may be inefficient because they cost taxpayers money.

Question 12

A monopolist maximizes profit by producing the quantity where:

Accepted Answer

$$MR = MC$$

Question 13

Which of the following statements about monopoly regulation is correct?

Accepted Answer

Price cap regulation sets a maximum price that the firm can charge.

Question 14

Suppose a monopolist faces the demand curve $$P = 20 - Q$$ and has $$MC = 8. $$What is the profit-maximizing price?

Accepted Answer

$$P = 16$$

Question 15

Which of the following is true about the slope of the marginal revenue curve for a single-price monopoly?

Accepted Answer

It is twice as steep as the demand curve.

Question 16

In a monopoly, the redistribution of surplus occurs from:

Accepted Answer

Consumers to producers.

Question 17

Which of the following is a consequence of rent seeking in monopoly markets?

Accepted Answer

It may drive up the average total cost curve.

Question 18

Which of the following is NOT a form of monopoly regulation?

Accepted Answer

Perfect competition enforcement

Question 19

If a monopolist's average total cost (ATC) is $$4$$ and it produces $$Q = 2$$ units at a price of $$P = 11$$, what is its profit?

Accepted Answer

$$Profit = 7$$

Question 20

Which of the following best describes perfect price discrimination?

Accepted Answer

Charging each customer a price equal to their maximum willingness to pay.

Monopoly: Market Power, Price Setting, and Regulation

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