Monopoly Quiz

A monopolistic firm is MOST likely to do which of the following?

• Allow itself to be too influenced by consumer demands.
• Devote too much time to minimizing production costs.
• Restrict output below socially desirable levels.
• Set prices as high as the market will tolerate.

The monopolist can set a price well above the competitive supply and demand level by...

• advertising to expand the market.
• pushing the supply curve as far to the right as it will go.
• restricting output.
• using technology to speed production.

A firm that is given exclusive rights by the government to provide a particular service in a particular area is BEST termed...

• the market demand curve is downward sloping to the right.
• a franchise monopoly.
• a natural monopoly.
• a pure monopoly.

A natural monopoly is MOST likely to occur whenever...

• the market demand curve is downward sloping to the right.
• the market demand curve is horizontal.
• production costs decline with output.
• production costs increase with output.

Which of the following statements is probably MOST accurate?

• Without the financial power of the big monopolies, technological innovation as we know it would likely die out.
• Smaller firms promote sufficient technology to meet our economic and social needs.
• In most cases, monopolies actually work to thwart technological advancement since it threatens their monopolistic position.
• Given the diversity of interests and needs, some combination of market structures is probably the most efficient means of promoting technology.