Economics MCQs For CSS Set 3

1. Which of the following is a characteristic of pure monopoly?
   A. one seller of the product
   B. low barriers to entry
   C. close substitute products
   D. perfect information

   2. In pure monopoly, what is the relation between the price and the marginal revenue?
   A. the price is greater than the marginal revenue
   B. the price is less than the marginal revenue
   C. there is no relation
   D. they are equal

   3. In order to maximize profits, a monopoly company will produce that quantity at which the:
   A. marginal revenue equals average total cost
   B. price equals marginal revenue
   C. marginal revenue equals marginal cost
   D. total revenue equals total cost

   4. Quantity Price Total Cost
   1 $100 $ 60
   2 95 130
   3 90 210
   4 85 300
   5 80 400

   This monopolist should produce:
   A. 1
   B. 2
   C. 3
   D. 4
   e. 5

   5. Compared to the case of perfect competition, a monopolist is more likely to:
   A. charge a higher price
   B. produce a lower quantity of the product
   C. make a greater amount of economic profit
   D. all of the above

   6. Which of the following is necessary for a natural monopoly?
   A. economies of scale
   B. a high proportion of the total cost is the cost of capital goods
   C. the market is very small
   D. all of the above

   7. Which of the following is true about the way by which SDG&E has been regulated by the PUC?
   A. SDG&E has been allowed to earn very high economic profits
   B. The profits of SDG&E are calculated as a percent of the value of the capital goods
   C. When the demand for electricity would fall, the price of electricity would also fall
   D. All of the above

   8. Which of the following best defines price discrimination?
   A. charging different prices on the basis of race
   B. charging different prices for goods with different costs of production
   C. charging different prices based on cost-of-service differences
   D. selling a certain product of given quality and cost per unit at different prices to different buyers

   9. In order to practice price discrimination, which of the following is needed?
   A. some degree of monopoly power
   B. an ability to separate the market
   C. an ability to prevent reselling
   D. all of the above

   10. In price discrimination, which section of the market is charged the higher price?
   A. the section with the richest people
   B. the section with the oldest people
   C. the section with the most inelastic demand
   D. the section with the most elastic demand

Answers: A A C C D D B D D C