1. How many sellers constitute a monopoly market? a. 1 b. 2 or 3 c. between 5 to

Question

1. How many sellers constitute a monopoly market? a. 1 b. 2 or 3 c. between 5 to 10 d. between 10 and 50 e. many

2. Which of the following would help to establish a monopoly? a. possession of patent or copyright privileges b. sharply increasing average cost at low rate of output c. minimal industry barriers to entry for new products d. a perfectly elastic demand curve for the product e. the need to buy basic inputs in the world market

3. A basic characteristic of natural monopoly is: a. that the firm has control over the entire supply of a basic input. b. that a firm is protected by a government franchise. c. patent protection of certain basic processes. d. continuously decreasing average costs as the firm expands output.

4. The monopolist faces a demand curve which is: a. horizontal. b. less elastic than the market demand curve for the product. c. upward-sloping to the right. d. identical to the industry demand curve.

5. Marginal revenue: a. generally rise as output increases. b. exceeds price under conditions of monopoly. c. is the addition to total revenue from the sale of one more unit d. coincides with marginal cost at each level of output. e. is another name for profit.

6. If a firm’s demand curve slopes downward, the firm’s: a. marginal revenue will rise as price is cut. b. marginal revenue will always be less than price. c. total revenue will fall steadily as price is cut. d. demand will be less than marginal revenue. e. price will exceed total revenue.

7. When marginal cost exceeds marginal revenue, a monopolist should reduce: a. output. b. price. c. demand. d. revenue. e. profit.

8. A monopolist seeking to maximize total profits will: a. maximize profit per unit. b. minimize cost per unit. c. charge the highest possible price. d. set price equal to average total cost. e. set marginal cost equal to marginal revenue.

Explanation / Answer

1.

a. 1 seller

as monopoly is a market where the one seller owns 100% market share

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