Monopoly is a market structure in which
A Many sellers sell identical products
B One seller controls the entire market
C Few sellers sell differentiated products
D Many buyers face one price
Monopoly exists when a single firm supplies the entire market with no close substitutes.
A monopolist is called a price maker because
A Government fixes prices
B Demand is perfectly elastic
C It can influence market price by changing output
D Costs are fixed
Since the monopolist is the sole seller, it controls output and thereby influences price.
The demand curve faced by a monopolist is
A Perfectly elastic
B Upward sloping
C Downward sloping
D Vertical
A monopolist faces the market demand curve, which is downward sloping.
Under monopoly, average revenue (AR) curve is
A Horizontal
B Same as supply curve
C Same as market demand curve
D Above marginal revenue curve
Since the monopolist is the industry, the market demand curve is its AR curve.
Under monopoly, marginal revenue (MR) curve lies
A Above AR
B Coinciding with AR
C Below AR
D Above AC
To sell additional units, monopolist must reduce price, so MR falls faster than AR.
Profit maximization under monopoly occurs when
A AR = AC
B MR = MC
C TR = TC
D MR = AR
Like all firms, monopolists maximize profit where MR equals MC.
Monopoly price is determined at the point where
A MC intersects AR
B MC intersects MR and price is taken from AR
C AR is maximum
D TR is minimum
Output is fixed where MR = MC, and price is determined from the AR curve at that output.
Compared to perfect competition, monopoly price is generally
A Lower and output higher
B Equal and output equal
C Higher and output lower
D Lower and output lower
Monopoly restricts output to raise price above competitive level.
Monopoly profit in the long run is possible because
A Demand is elastic
B Cost is zero
C Barriers to entry exist
D Government fixes price
Entry barriers prevent new firms from entering and eroding monopoly profits.
Which of the following is NOT a barrier to entry?
A Legal restrictions
B Control over raw materials
C Free entry
D Economies of scale
Free entry allows new firms to enter and is opposite of monopoly condition.
A monopolist can earn supernormal profit even in the long run because
A Demand always increases
B Cost is always falling
C Entry of new firms is blocked
D MR is constant
Absence of competition allows monopoly to sustain abnormal profits.
In monopoly equilibrium, price elasticity of demand is
A Always unitary
B Always perfectly elastic
C Greater than one
D Less than one
A monopolist never operates in inelastic portion since MR would be negative there.
If demand is inelastic at a point, monopolist will
A Increase output
B Reduce output
C Raise price and reduce output
D Produce at that point
In inelastic range, raising price increases total revenue, so monopolist avoids producing there.
Price discrimination means
A Charging one price to all buyers
B Charging different prices for same product
C Charging different prices for different products
D Selling below cost
Price discrimination involves charging different prices to different buyers for the same product.
Price discrimination is possible only when
A Product is homogeneous
B Market can be segmented
C Government regulates prices
D Demand is perfectly elastic
The monopolist must divide buyers into separate markets with different elasticities.
Which of the following is a necessary condition for price discrimination?
A Free entry
B Transferability of goods
C Different price elasticities of demand
D Perfect competition
Different elasticities allow charging different prices profitably.
Perfect price discrimination refers to
A Charging same price to all buyers
B Charging different prices based on cost
C Charging maximum price each consumer is willing to pay
D Charging price equal to MC
Under perfect discrimination, monopolist captures entire consumer surplus.
First-degree price discrimination is also known as
A Wholesale pricing
B Group pricing
C Personal pricing
D Dumping
First-degree discrimination charges each consumer their maximum willingness to pay.
Second-degree price discrimination is based on
A Income of consumers
B Quantity purchased
C Geographic markets
D Cost differences
Different prices are charged for different quantities, such as bulk discounts.
Third-degree price discrimination is based on
A Time of purchase
B Consumer income
C Market segmentation
D Cost differences
Different prices are charged in different markets (e.g., students vs adults).
Charging lower prices in foreign markets and higher prices domestically is called
A Skimming
B Dumping
C Penetration pricing
D Administered pricing
Dumping involves selling at lower prices abroad than in home market.
A monopolist practicing price discrimination aims to
A Maximize output
B Minimize cost
C Maximize profit
D Ensure fairness
Price discrimination increases total profit by exploiting differences in willingness to pay.
Which market form most commonly practices price discrimination?
A Perfect competition
B Monopoly
C Monopolistic competition
D Pure oligopoly
Monopoly has the market power needed to charge different prices.
Under perfect price discrimination, marginal revenue equals
A Average revenue
B Marginal cost
C Price
D Demand elasticity
With perfect discrimination, price = MR for each unit sold.
Price discrimination increases total output because
A Price equals MC
B Consumer surplus is transferred to producer
C Firm operates in elastic demand segments
D Cost decreases
Selling in elastic markets expands output and revenue.
Which of the following is an example of second-degree price discrimination?
A Railway concession to students
B Lower tariff for bulk electricity users
C Different prices in different countries
D Seasonal pricing
Bulk usage discounts depend on quantity purchased.
Which of the following is an example of third-degree price discrimination?
A Off-season discounts
B Senior citizen concessions
C Quantity discounts
D Personalized pricing
Senior citizens form a separate market group with different elasticity.
Price discrimination is NOT possible when
A Demand differs across markets
B Goods can be resold easily
C Monopoly power exists
D Markets are separable
If resale is possible, consumers will arbitrage, defeating discrimination.
A monopolist can sell in two markets at different prices if
A Costs differ
B Elasticities differ
C Quantities differ
D Profits differ
Different elasticities allow different prices for profit maximization.
Under price discrimination, the monopolist allocates output so that
A MR is equal in all markets
B Price is equal in all markets
C Cost is equal in all markets
D AR is zero
Profit maximization requires MR in each market to be equal to MC.
Price discrimination leads to redistribution of
A Producer surplus
B Consumer surplus
C National income
D Factor income
Consumer surplus is transferred to producer as extra profit.
Which of the following prevents a monopolist from charging extremely high prices?
A Government intervention
B Elastic demand
C Entry barriers
D Cost structure
Highly elastic demand limits price increase as consumers would stop buying.
Under monopoly, allocative efficiency is
A Achieved
B Partially achieved
C Not achieved
D Always achieved
Monopoly price exceeds MC, so allocative efficiency (P = MC) is not met.
Monopoly results in welfare loss because
A Output is too high
B Price is too low
C Output is restricted below competitive level
D Costs are minimum
Monopoly restricts output to raise price, causing deadweight loss.
The deadweight loss of monopoly arises due to
A Excess demand
B Excess supply
C Underproduction
D Overproduction
Monopoly produces less than socially optimal output.
Which curve shows deadweight loss under monopoly?
A Area between AR and AC
B Area between MC and MR
C Area between demand and MC over restricted output
D Area between TC and TR
Deadweight loss is the net welfare loss due to output restriction.
Price discrimination can reduce deadweight loss when
A Prices increase
B Output increases toward competitive level
C Costs rise
D Demand becomes inelastic
Expanded output under discrimination can reduce welfare loss.
Monopoly may exist due to
A Product differentiation only
B Legal protection like patents
C Many sellers
D Free entry
Legal barriers such as patents create monopoly power.
Which of the following is a natural monopoly?
A Small retail shop
B Electricity distribution
C Garment industry
D Agriculture
High fixed cost and economies of scale make single firm efficient.
Natural monopoly is regulated mainly to
A Increase profit
B Ensure allocative efficiency
C Encourage entry
D Increase demand
Regulation aims to prevent excessive pricing and protect consumers.
A monopolist sets output where
A AR = AC
B MR = MC
C Price = MC
D TR is minimum
Profit maximization rule applies to monopoly as well.
Monopoly power is weakened when
A Barriers increase
B Demand becomes inelastic
C Close substitutes appear
D Costs fall
Availability of substitutes increases elasticity, limiting monopoly power.
A monopolist facing perfectly elastic demand would behave like
A Monopoly
B Oligopoly
C Perfect competitor
D Monopolistic competitor
Perfect elasticity means price taker behavior.
Monopoly price discrimination based on time (peak and off-peak) is
A First-degree
B Second-degree
C Third-degree
D Dumping
Different time periods form separate markets.
Price discrimination based on quantity slabs is
A First-degree
B Second-degree
C Third-degree
D Dumping
Different prices for different quantities define second-degree discrimination.
Price discrimination based on personal characteristics is
A First-degree
B Second-degree
C Third-degree
D Cost-based pricing
First-degree discrimination charges based on individual willingness to pay.
Under perfect price discrimination, consumer surplus is
A Maximized
B Zero
C Transferred entirely to producer
D Shared equally
Producer captures entire consumer surplus.
Monopoly price discrimination requires absence of
A Market power
B Price elasticity differences
C Arbitrage
D Demand
Resale (arbitrage) destroys price discrimination.
Which pricing practice is legally restricted in many countries?
A Uniform pricing
B Cost-plus pricing
C Dumping
D Competitive pricing
Dumping can harm domestic industries and is regulated.
Monopoly pricing generally results in
A Lower price and higher output
B Higher price and lower output
C Equal price and output
D Maximum social welfare
Monopoly restricts output to raise price above competitive level.