Monopoly For Economics(Economics ) Questions and Answers

Question 1. Which of the following best defines price discrimination ?
  1.    charging different prices on the basis of race
  2.    charging different prices for goods with different costs of production
  3.    charging different prices based on cost-of-service differences
  4.    selling a certain product of given quality and cost per unit at different prices to different buyers
Explanation:-
Answer: Option D. -> selling a certain product of given quality and cost per unit at different prices to different buyers
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 2. If a marginal revenue exceeds marginal cost, a monopolists should?
  1.    increase should
  2.    decrease output
  3.    keep output the same because profits are maximized when marginal revenue exceeds marginal cost
  4.    raise the price
Explanation:-
Answer: Option A. -> increase should
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 3. Using government regulations to force a natural monopoly to charge a price equal to his marginal cost will ?
  1.    Cause the monopolist to exit the market
  2.    improve efficieny
  3.    raise the price of good
  4.    attract additional firms to enter the market
Explanation:-
Answer: Option A. -> Cause the monopolist to exit the market
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 4. Public ownership of natural monopolies ?
  1.    tends to be inefficient.
  2.    usually lowers the cost of production dramatically.
  3.    creates synergies between the newly acquired firm and other government-owned companies.
  4.    does none of the things described in these answers
Explanation:-
Answer: Option A. -> tends to be inefficient.
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 5. Compared to a perfectly competitive market a monopoly market will usually generate ?
  1.    higher prices and lower output
  2.    higher prices and higher output
  3.    lower prices and lower output
  4.    lower prices and higher output
Explanation:-
Answer: Option A. -> higher prices and lower output
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 6. In pure monopoly, what is the relation between the price and the marginal revenue ?
  1.    the price is greater than the marginal revenue
  2.    the price is less than the marginal revenue
  3.    there is no relation
  4.    they are equal
Explanation:-
Answer: Option A. -> the price is greater than the marginal revenue
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 7. Compared to the case of perfect competition, a monopolist is more likely to ?
  1.    charge a higher price
  2.    produce a lower quantity of the product
  3.    make a greater amount of economic profit
  4.    all of the above
Explanation:-
Answer: Option D. -> all of the above
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 8. If regulators break up a natural monopoly into many smaller firms, the cost of production ?
  1.    will rise
  2.    will fall
  3.    will remain the same
  4.    could either rise or fall depending on the elasticity of the monopolist’s supply curve
Explanation:-
Answer: Option A. -> will rise
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 9. A firm whose average total cost continually declines at least to the quantity that could supply the entire market is known as a ?
  1.    natural monopoly
  2.    perfect competitor
  3.    government monopoly
  4.    regulated monopoly
Explanation:-
Answer: Option A. -> natural monopoly
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 10. A monopolist maximizes profit by producing the quantity at which ?
  1.    marginal revenue equals marginal cost
  2.    marginal revenue equals price
  3.    marginal cost equals price
  4.    marginal cost equals demand
  5.    none of these answers
Explanation:-
Answer: Option A. -> marginal revenue equals marginal cost
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
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