Economics MCQs

Page No. 296

The marginal revenue curve in monopoly ?


a Equals the demand curve

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bIs parallel with the demand curve

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cLies below and converges with the demand curve

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d Lies below and diverges from the demand curve

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In price discrimination, which section of the market is charged the higher price ?


aThe section with the richest people

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bThe section with the oldest people

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cThe section with the most inelastic demand

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dThe section with the most elastic demand

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In order to practice price discrimination which of the following is needed ?


asome degree of monopoly power

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ban ability to separate the market

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can ability to prevent reselling

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dall of the above

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View Answer all of the above

Which of the following is necessary for a natural monopoly ?


aeconomies of scale

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b a high proportion of the total cost in the cost of capital goods

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cthe market is very small

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dall of the above

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View Answer all of the above

This monopolist should produce ?


a 1

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b 2

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c 3

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d 4

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View Answer 3

In order to maximize profits, a monopoly company will produce that quantity at which the ?


a marginal revenue equals average total cost

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bPrice equals marginal revenue

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cmarginal revenue equals marginal cost

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dtotal revenue equals total cost

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Which of the following is a characteristic of pure monopoly ?


aOne seller of the product

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blow barriers to entry

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cclose substitute products

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d perfect information

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A monopoly is able to continue to generate economic profits in the long run because ?


athere is some barrier to entry to that market

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bthe monopolist is financially powerful.

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cantitrust laws eliminate competitors for a specified number of years.

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dof all of the things described in these answers

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Which of the follow statements about price discrimination is not true ?


a Perfect price discrimination generates a deadweight loss

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bPrice discrimination can raise economic welfare.

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cPrice discrimination increases a monopolist’s profits.

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d For a monopolist to engage in price discrimination buyers must be unable to engage in arbitrage.

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The purpose of antitrust (also known as competition) laws is to ?


aIncrease competition in an industry by preventing mergers and breaking up large firms.

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b regulate the prices charged by a monopoly

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cincrease merger activity to help generate synergies that reduce costs and raise efficiency.

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d create public ownership of natural monopolies

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