What is true of a monopoly in long-run equilibrium?
Correct answer B. The firm is allocatively inefficient
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Monopoly MCQs
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Which statement is NOT true of a monopoly?
Correct answer D. There is freedom of entry and exit into the industry in the long run
What did Joseph Schumpeter argue about monopolies?
Correct answer C. Monopoly profits act as an incentive for innovation
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How does the UK government deal with monopolies?
Correct answer A. Has the right to investigate monopolies and will assess each one on its own merits
What is a firm called whose average total cost keeps falling at least up to the output needed to supply the whole market?
Correct answer D. Natural monopoly
At which output level does a monopolist maximise profit?
Correct answer D. Marginal revenue equals marginal cost
Compared with a perfectly competitive market, what does a monopoly market usually produce?
Correct answer D. Higher prices and lower output
What happens if government regulation forces a natural monopoly to set its price equal to marginal cost?
Correct answer D. It causes the monopolist to exit the market
What tends to be true of public ownership of natural monopolies?
Correct answer B. Tends to be inefficient
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If regulators split a natural monopoly into many smaller firms, what happens to the cost of production?
Correct answer C. Will rise
If marginal revenue is greater than marginal cost, what should a monopolist do?
Correct answer B. Increase output
Under pure monopoly, how do price and marginal revenue compare?
Correct answer A. The price is greater than the marginal revenue
Compared with perfect competition, what is a monopolist more likely to do?
Correct answer D. All of the above
Which of these best defines price discrimination?
Correct answer B. Selling a product of given quality and cost per unit at different prices to different buyers