Why are monopolies generally considered bad for the economy?
They earn super normal profit and so exploit consumers
They use scarce resources inefficiently
Both of the above
Where do monopolies aim to produce?
Where the Marginal Cost curve intersects the Marginal Revenue curve
Where the Marginal Cost curve intersects the Average Revenue curve
Wherever - monopolies earn super normal profit regardless and so it's not important
What profits to monopolies earn?
Sub normal profit
Normal profit
Super normal profit
Which of the following is a true statement?
Monopolies have upward sloping demand curves
Monopolies have downward sloping demand curves
Monopolies have horizontal demand curves
Which of the following is one of the assumptions we, as economists, make about monopolies?
Monopolists can control the quantity sold but not the price charged
Monopolist can control the price charged but not the quantity sold
Monopolists can control either the price charged or the quantity sold, but not both
Why are the long-run and short-run equilibriums of a monopoly identical?
Because barriers to entry prevent the entry of new firms into the industry and so consumers have no choice but to keep buying the product from the one firm
Because governments strive to aid big companies, including monopolies, to survive in the economy
Because monopolies can manipulate the market to preserve their profits
Are consumers exploited by monopolies?
No, never
It depends on the industry
Yes, definitely
Which of the following are benefits of a monopoly?
Employment is more secure
Consumers feel more comfortable with bigger brands
Continuity of supply is more secure
All of the above
None of the above, there are no advantages
Which of the following are possible reasons for the existence of a monopoly?
Governments sometimes prevent other firms joining an industry
It can be so expensive to set up in a industry that no other firm will join the industry
Consumers become so loyal to a product that they would never swap to an alternative, and so other firms don't set up in the industry
Monopolies sell high quality goods for expensive prices. True or false?
True - they benefit from a lack of competition which leads to higher prices, but, again because of this lack of competitoon, they don't need to cut costs and reduce the quality of their goods
False - their goods are more expensive than they need to be but not of a higher quality because of the lack of competiton
It depends - monopolies always sell at a higher price than necessary, but whether they sell a higher quality good too varies - it depends on the firm in question
