Economics MCQs

Page No. 295

If regulators break up a natural monopoly into many smaller firms, the cost of production ?


a will rise


b will fall


c will remain the same


dcould either rise or fall depending on the elasticity of the monopolist’s supply curve


View Answer will rise

Public ownership of natural monopolies ?


atends to be inefficient.


busually lowers the cost of production dramatically.


ccreates synergies between the newly acquired firm and other government-owned companies.


ddoes none of the things described in these answers



Using government regulations to force a natural monopoly to charge a price equal to his marginal cost will ?


aCause the monopolist to exit the market


b improve efficieny


craise the price of good


dattract additional firms to enter the market



Compared to a perfectly competitive market a monopoly market will usually generate ?


ahigher prices and lower output


b higher prices and higher output


clower prices and lower output


dlower prices and higher output



A monopolist maximizes profit by producing the quantity at which ?


amarginal revenue equals marginal cost


bmarginal revenue equals price


cmarginal cost equals price


dNone of these answers



A firm whose average total cost continually declines at least to the quantity that could supply the entire market is known as a ?


anatural monopoly


b perfect competitor


cgovernment monopoly


d regulated monopoly


View Answer natural monopoly

In the UK the government ?


a Bans monopolies


bFines all monopolies


c Prevents firms acquiring more than 25% of the market


dHas the right to investigate monopolies and will assess each one on its own merits



According to Schumpeter ?


a Monopolies are inefficient


bMonopoly profits ac as an incentive for innovation


cMonopolies are alocatively efficient


d Monopolies are productively efficient



In a monopoly which of the following is not true ?


a Products are differentiated


bThere is freedom of entry and exit into the industry in the long run


cThe firm is a price taker


d There is one main sellers



In monopoly in long run equilibrium ?


aThe firm is Productively efficient


b The firm is allocatively inefficient


cThe firm produces where marginal cost is less than marginal revenue


dThe firm produces at the socially optimal level



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