Introduction to Monopoly

What is the defining characteristic of a monopoly?

• Multiple sellers of a good

• A single seller of a good

• No sellers in the market

• Two sellers of a good

How does a monopoly differ from perfect competition?

• Monopolies have no sellers

• Monopolies have multiple sellers

• Monopolies are price takers

• Monopolies have a single seller

What is meant by 'monopoly power'?

• The ability to influence market prices

• The inability to influence market prices

• The inability to produce goods

• The ability to increase market competition

Why might a monopolist choose to reduce output?

• To decrease prices

• To increase prices and profits

• To increase market competition

• To reduce market share

What is a barrier to entry?

• An advantage for new firms

• A benefit for consumers

• An obstacle for existing firms

• An obstacle for new firms

How do patents act as a barrier to entry?

• They give a firm exclusive rights to produce a good

• They prevent any firm from producing a good

• They allow multiple firms to produce the same good

• They encourage new firms to enter the market

How can product differentiation lead to monopoly power?

• By making products identical

• By increasing the number of competitors

• By reducing consumer choice

• By creating unique products with no substitutes

What is an example of product differentiation leading to monopoly power?

• Standardized healthcare services

• Landing slots at major airports

• Multiple brands of crisps

• Identical train services

How can governments create monopolies?

• By introducing competition

• By reducing market regulations

• By encouraging new entrants

• By legislating exclusive rights

What is a natural monopoly?

• A market with multiple small firms

• A market where one firm can supply at lower costs

• A market with high competition

• A market with no economies of scale