Economics MCQs

Page No. 296

The marginal revenue curve in monopoly ?


a Equals the demand curve


bIs parallel with the demand curve


cLies below and converges with the demand curve


d Lies below and diverges from the demand curve



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


aThe section with the richest people


bThe section with the oldest people


cThe section with the most inelastic demand


dThe section with the most elastic demand



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


asome degree of monopoly power


ban ability to separate the market


can ability to prevent reselling


dall of the above


View Answer all of the above

Which of the following is necessary for a natural monopoly ?


aeconomies of scale


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


cthe market is very small


dall of the above


View Answer all of the above

This monopolist should produce ?


a 1


b 2


c 3


d 4


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


bPrice equals marginal revenue


cmarginal revenue equals marginal cost


dtotal revenue equals total cost



Which of the following is a characteristic of pure monopoly ?


aOne seller of the product


blow barriers to entry


cclose substitute products


d perfect information



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


athere is some barrier to entry to that market


bthe monopolist is financially powerful.


cantitrust laws eliminate competitors for a specified number of years.


dof all of the things described in these answers



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


a Perfect price discrimination generates a deadweight loss


bPrice discrimination can raise economic welfare.


cPrice discrimination increases a monopolist’s profits.


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



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


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


b regulate the prices charged by a monopoly


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


d create public ownership of natural monopolies



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