Economics MCQs

Page No. 295

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


a will rise

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b will fall

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c will remain the same

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

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View Answer will rise

Public ownership of natural monopolies ?


atends to be inefficient.

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busually lowers the cost of production dramatically.

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

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ddoes none of the things described in these answers

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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

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b improve efficieny

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craise the price of good

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dattract additional firms to enter the market

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


ahigher prices and lower output

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b higher prices and higher output

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clower prices and lower output

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dlower prices and higher output

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A monopolist maximizes profit by producing the quantity at which ?


amarginal revenue equals marginal cost

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bmarginal revenue equals price

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cmarginal cost equals price

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dNone of these answers

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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

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b perfect competitor

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cgovernment monopoly

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d regulated monopoly

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View Answer natural monopoly

In the UK the government ?


a Bans monopolies

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bFines all monopolies

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c Prevents firms acquiring more than 25% of the market

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

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According to Schumpeter ?


a Monopolies are inefficient

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bMonopoly profits ac as an incentive for innovation

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cMonopolies are alocatively efficient

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d Monopolies are productively efficient

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In a monopoly which of the following is not true ?


a Products are differentiated

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

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cThe firm is a price taker

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d There is one main sellers

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In monopoly in long run equilibrium ?


aThe firm is Productively efficient

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b The firm is allocatively inefficient

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cThe firm produces where marginal cost is less than marginal revenue

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dThe firm produces at the socially optimal level

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