Monopoly Quiz

They earn super normal profit and so exploit consumers

They use scarce resources inefficiently

Both of the above

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

Sub normal profit

Normal profit

Super normal profit

Monopolies have upward sloping demand curves

Monopolies have downward sloping demand curves

Monopolies have horizontal demand curves

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

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

No, never

It depends on the industry

Yes, definitely

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

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

All of the above

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