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Multiple Choice Quiz
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1
Monopoly power refers to
A)the absolute size of a firm in terms of its assets.
B)the extent of the firm's control over market supply.
C)the power of the government to block entry into certain industries.
D)all of the above.
2
Profit maximization is
A)a goal unique to monopoly firms.
B)a major objective for firms in any market structure.
C)the only goal of firms.
D)none of the above.
3
If MC > MR, a competitive firm could increase profits by
A)reducing price.
B)increasing price.
C)reducing output.
D)increasing output.
4
The difference between a firm's total revenue and total cost is
A)dead weight welfare loss.
B)the market concentration ratio.
C)profit.
D)marginal revenue.
5
Which of the following is indicated when average cost declines as output increases?
A)natural monopoly
B)economies of scale
C)regulation to increase social welfare
D)all of the above
6
If producing 10 costs $100 and producing 11 costs $109 then
A)MC of the 11th unit is 10.
B)AC of the 11th unit is 10.
C)MC of the 10th unit is 10.
D)AC of the 10th unit is 10.
7
Dead weight welfare loss due to monopoly in the economy as a whole is estimated to be about
A)1% of GDP.
B)10% of GDP.
C)20% of GDP.
D)35% of GDP.
8
A profit maximizing firm will increase its production when
A)MR > MC.
B)TC > MC.
C)MC > MR.
D)TC > TR.
9
Compared to a competitive market, a monopolist will charge a
A)lower price and produce a larger quantity.
B)lower price and produce a smaller quantity.
C)higher price and produce a larger quantity.
D)higher price and produce a smaller quantity.
10
Entry barriers may be caused by
A)product differentiation.
B)brand loyalty.
C)occupational licensing.
D)government regulation.
E)all of the above.





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