When does X-inefficiency occur?
Correct answer B. Costs are higher than they could be due to a lack of competitive pressure
Topic / 34 questions
Monopoly MCQs
Monopoly MCQs cover how a single seller with no close substitutes decides its price and output, and how this differs from perfect competition. They suit economics students and competitive exam candidates, and each question reveals its correct answer immediately, so you can test your reasoning as you go.
- Miscellaneous Economics 737
- Basic of Economics 430
- Markets, Efficiency And The Public Interest 167
- Agriculture & Irrigation System of Pakistan 126
- Market 87
- Macroeconomic Issues and Analysis 75
- Money, Interest Rates And Output 73
- Introduction To Economics 70
- Population And Development 62
- Profit Maximizing Under Perfect Competition And Monopoly 56
- Income Inequality 52
- Non-Tariff Trade Barriers 48
- Aggregate Supply, Unemployment And Inflation 45
- Natural Resources and the Environment Toward Sustainable Development 44
- Costs , Supply And Perfect Competition 44
- Human Capital 42
- Labour Market 39
- Monopoly 35
- Long Term Economic Growth 30
- Inflation & Productivity 30
- Regional Trading Arrangements 29
- Characteristics and Institutions of Developing Countries 24
- Oligopoly 23
- Consumer Theory vs. Real Consumers 20
- Applied Microeconomics 20
- Alternative Theories Of The Firm 20
- Public Goods 20
- Balance of Payments, Aid and Foreign Investment 19
- Prices, Wages & Taxes 19
- Comparative GDP 19
- Budget Deficits And The Trade Balance 18
- Macroeconomic Policy Tools 18
- Asymmetric Information 17
- Application of Economics 16
- Production Factors 16
- Monopoly & Competition 15
- Capital Formation, Investment Choice, Information Technology, And Technical Progress 15
- Monetary, Fiscal And Incomes Policy, And Inflation 15
- Average And Total Cost 14
- Poverty, Malnutrition, And Income Inequality 12
- Monetary Union 10
What is true when a monopoly earns abnormal profits?
Correct answer B. The price set is greater than the marginal cost
Which of the following is NOT a barrier to entry?
Correct answer A. Mobility of resources
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Which statement is true of monopoly?
Correct answer D. There is one main seller
Where does a welfare loss occur under monopoly?
Correct answer A. The price is greater than the marginal cost
Which of the following is NOT a barrier to entry in a monopolised market?
Correct answer B. A single firm is very large
When a monopolist produces one more unit, how does the marginal revenue from that unit compare with the price?
Correct answer C. Below the price because the price effect outweighs the output effect
Which statement correctly compares price and marginal cost in competitive and monopolised markets?
Correct answer A. In competitive markets price equals marginal cost; in monopolised markets price exceeds marginal cost
Why is Thomson the monopoly producer of your textbook?
Correct answer C. Thomson has a legally protected exclusive right to produce this textbook
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What is the inefficiency associated with monopoly caused by?
Correct answer C. Underproduction of the good
What is the monopolist’s supply curve?
Correct answer A. Does not exist
What is the purpose of antitrust (competition) laws?
Correct answer B. Increase competition in an industry by preventing mergers and breaking up large firms
Which statement about price discrimination is NOT true?
Correct answer C. Perfect price discrimination generates a deadweight loss
Why can a monopoly keep earning economic profits in the long run?
Correct answer C. There is some barrier to entry to that market
Which of these is a feature of pure monopoly?
Correct answer B. One seller of the product
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To maximise profits, what quantity does a monopoly firm produce?
Correct answer D. Marginal revenue equals marginal cost
What is necessary for a natural monopoly to exist?
Correct answer D. All of the above
What is needed for a firm to practise price discrimination?
Correct answer D. All of the above
Under price discrimination, which part of the market is charged the higher price?
Correct answer D. The section with the most inelastic demand
How is the marginal revenue curve positioned under monopoly?
Correct answer B. Lies below and diverges from the demand curve
About Monopoly MCQs
This topic deals with market power. Questions examine why a monopolist's marginal revenue is below price, why profit is maximised where marginal revenue equals marginal cost, and why a monopolist has no supply curve in the usual sense. You will also compare monopoly with perfect competition: higher prices, lower output and deadweight loss. Other items cover X-inefficiency, where a firm sheltered from competition fails to keep costs down, and what a firm should do when marginal revenue exceeds marginal cost. These graphs and rules appear regularly in microeconomics papers and economics lecturer tests.
Exams that include Monopoly MCQs
Pakistan
- CSS
- PMS
- PPSC
- Lecturer tests
- Banking job tests
India
- UGC NET
- UPSC CSE
- IBPS PO
Bangladesh
- BCS
- Bangladesh Bank recruitment
- Bank job exams
Frequently asked questions
Why is marginal revenue less than price for a monopolist?
A monopolist faces the downward-sloping market demand curve, so to sell one more unit it must lower the price on all units sold, not just the extra one. The revenue lost on earlier units means marginal revenue is below the price. For a linear demand curve, the marginal revenue curve is twice as steep.
What is X-inefficiency?
X-inefficiency occurs when a firm does not produce at the lowest possible cost because it lacks competitive pressure. A monopolist may tolerate waste, overstaffing or poor management since rivals cannot take its customers. The term was introduced by economist Harvey Leibenstein in 1966.
How many Monopoly MCQs are on MCQs360?
MCQs360 has 35 Monopoly MCQs in its Economics section. They are free to practise with no sign-up, and each answer appears instantly, letting you check rules such as MR equals MC and the effects of market power quickly.
Last reviewed October 2026