Monopoly Quiz


A 10-question quiz on some of the basics of monopolies
Quiz by daniel.examtime, updated more than 1 year ago
Created by daniel.examtime over 10 years ago

Resource summary

Question 1

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

Question 2

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

Question 3

What profits to monopolies earn?
  • Sub normal profit
  • Normal profit
  • Super normal profit

Question 4

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

Question 5

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

Question 6

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

Question 7

Are consumers exploited by monopolies?
  • No, never
  • It depends on the industry
  • Yes, definitely

Question 8

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

Question 9

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
  • All of the above

Question 10

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
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