Quiz on monopoly

A public franchise creates a monopoly by restricting

• the prices that can be charged

• entry into the market

• the number of creators and inventors

• demand for the product

A government licence creates a monopoly by restricting

• entry into the market

• the number of complements for the product

• demand for the product

• the amount of advertising that can be undertaken

When the demand for a good or service limits the quantity that can be sold to an output at which the firm experiences economies of scale, the

• firm is a natural monopoly

• firm is a single-price monopoly

• good that the industry produces has close substitutes

• firms are protected from competition by a legal barrier

Firms that can price discriminate between customers do so to

• increase supply

• increase employment

• maximise profit

• support lower-income families

A single-price monopolist will produce the output at which

• demand is inelastic

• marginal revenue is zero

• marginal revenue equals marginal cost

• demand is perfectly elastic

A single-price monopoly causes a deadweight loss because it

• restricts output

• increases marginal cost

• maximises marginal revenue

• restricts demand

When a monopoly perfectly price discriminates, there is

• a large consumer surplus

• no producer surplus

• no consumer surplus

• an increase in supply

In an industry with a large number of firms:

• Competition is eliminated

• Collusion is impossible.

• One firm will dominate the market.

• Each firm will produce a large quantity, relative to market demand

A ‘natural’ monopoly refers to a monopoly that is defended from direct competition by:

• A government franchises.

• Economies of scale over a broad range of output

• A patent or copyright