Characteristics of Monopoly quiz #1 Flashcards
Characteristics of Monopoly quiz #1
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Which best describes the availability of substitutes in a monopoly? A monopoly offers unique goods with no close substitutes. Which statement is true about the relationship between a monopoly and its competition in a market? A monopoly faces no competition because it is the sole producer in the market. What is a natural monopoly? A natural monopoly occurs when economies of scale make it most efficient for a single firm to supply the entire market. Which of the following are assumptions made in the model of pure monopoly? There is one producer, no close substitutes, and significant barriers to entry. Which of the following statements is true of a monopoly? A monopoly is a price maker with substantial market power. Which of the following statements concerning a natural monopoly is true? A natural monopoly arises due to large economies of scale and high fixed costs. Which type of industry has a limited number of competing firms? An oligopoly has a limited number of competing firms. What qualities would ideally suit a monopolistic firm with regard to barriers to entry? High barriers to entry such as ownership of key resources, government regulation, and economies of scale. Which of the following are reasons that a monopolist is considered a price maker? A monopolist is the sole producer and faces the entire market demand curve. Which of the following is most likely to be a monopoly? A local electricity utility company. Which of the following are the main characteristics of a pure monopoly? Single producer, unique product, price maker, and barriers to entry. In monopolistic competition, how many firms are present? There are many firms, each selling differentiated products. Which of the following is a necessary characteristic of a monopoly? A monopoly must have barriers to entry. Which of the following is true about a monopolistically competitive firm? It faces a downward-sloping demand curve and sells differentiated products. Which of the following denotes the typical shape of the monopolist's total cost curve? The total cost curve typically increases with output, reflecting high fixed costs and lower variable costs. How does the monopoly determine the level of output that maximizes profit? A monopoly maximizes profit where marginal revenue equals marginal cost. Which one of the following is the most accurate description of a monopolist? A monopolist is the sole producer with significant control over price. Which of the following is true under a monopoly? The firm faces the entire market demand curve and can set prices. Which of the following statements is correct with regard to monopolies? Monopolies have market power and can restrict output to raise prices. Which statement about the differences between monopoly and perfect competition is incorrect? In monopoly, price equals marginal revenue; this is incorrect because price exceeds marginal revenue in monopoly. Which of the following scenarios would represent a monopoly? A single firm supplies all electricity to a city. Which of the following is true about a monopoly? A monopoly can set prices due to lack of competition. Which of the following terms is not utilized by monopolists in determining how to maximize profit? Supply curve is not used by monopolists to determine profit maximization. Which of the following statements about a monopolist is true? A monopolist faces a downward-sloping demand curve. Which phrase would be most characteristic of pure monopoly? Single seller with no close substitutes. Netflix is an example of what type of market structure? Netflix operates in a market with monopoly-like characteristics due to limited substitutes. Would a monopolist still produce if they are getting zero profit? A monopolist may continue to produce if covering variable costs, even with zero profit. Which of the following could be considered a monopoly? A company with exclusive rights to a patented product. Which of the following describes a benefit of monopolies relative to perfectly competitive markets? Monopolies may achieve economies of scale, lowering average costs. Which of the following are properties of a monopoly? (check all that apply.) Single seller, unique product, price maker, barriers to entry. Which of the following is an essential characteristic of a monopoly? Barriers to entry. Which of the following is true under monopoly? The firm can influence the market price. Which statement describes a monopoly? A monopoly is a market with one producer and no close substitutes. Which type of free market has no competition? A monopoly has no competition. Which statement concerning monopolists and a product's price is true? Monopolists set prices above marginal cost. Which of the following is always true for a firm with monopsony power? It is the sole buyer in the market. Which of the following is an example of a price-discriminating monopoly? A movie theater charging different prices for children and adults. Which of the following is the most accurate description of a monopolist? A monopolist is the only seller in the market with control over price. Which of the following firms would likely pose the least competitive threat? A firm with exclusive control over a key resource. For a monopoly firm, what is the relationship between price and marginal revenue? Price is greater than marginal revenue.
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