4.2-Monopoly

Question 1

What is a monopoly?

Answer 1

A market structure where a single seller dominates the market.

Question 2

True or False: A monopoly exists when there are many sellers in the market.

Answer 2

False

Question 3

What is the main characteristic of a monopolistic market?

Answer 3

The presence of a single seller with significant market power.

Question 4

Fill in the blank: In a monopoly, the seller is a price __________.

Answer 4

maker

Question 5

What are barriers to entry?

Answer 5

Obstacles that prevent new competitors from easily entering a market.

Question 6

Name one common barrier to entry in a monopoly.

Answer 6

High startup costs

Question 7

What is ‘natural monopoly’?

Answer 7

A type of monopoly that occurs when a single firm can supply the entire market at a lower cost than multiple firms.

Question 8

True or False: Monopolies always lead to higher prices for consumers.

Answer 8

True

Question 9

What is the demand curve for a monopolist?

Answer 9

Downward sloping.

Question 10

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

Answer 10

By producing where marginal cost equals marginal revenue.

Question 11

What is consumer surplus?

Answer 11

The difference between what consumers are willing to pay and what they actually pay.

Question 12

Fill in the blank: Monopolies can lead to a loss of __________.

Answer 12

consumer surplus

Question 13

What is price discrimination?

Answer 13

Charging different prices to different consumers for the same good or service.

Question 14

What is one potential benefit of a monopoly?

Answer 14

Increased investment in research and development.

Question 15

True or False: Monopolies can lead to inefficiencies in the market.

Answer 15

True

Question 16

What is ‘regulation’ in the context of monopolies?

Answer 16

Government intervention to control prices and output levels.

Question 17

What does the term ‘monopoly power’ refer to?

Answer 17

The ability of a monopolist to set prices above marginal cost.

Question 18

Which of the following is an example of a monopoly: A) Local bakery B) Public utility C) Grocery store?

Answer 18

B) Public utility

Question 19

Fill in the blank: A monopolist’s marginal revenue is __________ than the price.

Answer 19

less

Question 20

What is ‘deadweight loss’ in a monopoly?

Answer 20

The loss of economic efficiency that occurs when the equilibrium outcome is not achieved.

Question 21

List one way governments can promote competition in a monopolistic market.

Answer 21

Deregulation

Question 22

What is ‘price ceiling’?

Answer 22

A maximum price set by the government that can be charged for a good or service.

Question 23

True or False: A monopoly can exist in a perfectly competitive market.

Answer 23

False

Question 24

What is ‘monopsony’?

Answer 24

A market structure where there is a single buyer for a product or service.

Question 25

Fill in the blank: A monopolist will produce where __________ equals __________.

Answer 25

marginal cost; marginal revenue

Question 26

What is 'allocative efficiency'?

Answer 26

A situation where resources are distributed in such a way that maximizes total welfare.

Question 27

What effect does a monopoly have on output compared to a competitive market?

Answer 27

A monopoly produces less output.

Question 28

What is 'price elasticity of demand'?

Answer 28

A measure of how much the quantity demanded of a good responds to a change in price.

Question 29

True or False: Monopolists face a perfectly elastic demand curve.

Answer 29

False

Question 30

What is a 'patent'?

Answer 30

A legal right granted to an inventor to exclusively produce and sell their invention.

Question 31

Fill in the blank: Monopolies can lead to __________ in innovation.

Answer 31

reduced competition

Question 32

What is 'social welfare'?

Answer 32

The overall well-being of society in terms of economic efficiency and equity.

Question 33

What happens to consumer choice in a monopoly?

Answer 33

It is typically reduced.

Question 34

Fill in the blank: A monopoly will typically sell at a __________ price than a competitive market.

Answer 34

higher

Question 35

What is 'barriers to exit'?

Answer 35

Obstacles that make it difficult for a company to leave a market.

Question 36

True or False: A monopolist can sustain economic profits in the long run.

Answer 36

True

Question 37

What is 'exclusive dealing'?

Answer 37

An agreement that restricts a buyer from purchasing goods from competitors.

Question 38

What is 'network effects'?

Answer 38

The phenomenon where a product or service becomes more valuable as more people use it.

Question 39

What is the impact of a monopoly on prices and output levels?

Answer 39

Higher prices and lower output levels compared to competitive markets.