.11.objective.

Question 1 X inefficiency occurs when: a) The price is greater than the marginal cost b) The price is greater than the average cost c) Costs are higher than they could be due to a lack of competitive pressure d) There are external costs Question 2 The marginal revenue curve in monopoly: a) Equals the demand curve b) Is parallel with the demand curve c) Lies below and converges with the demand curve d) Lies below and diverges from the demand curve Question 3 In monopoly when abnormal profits are made: a) The price set is greater than the average cost b) The price is less than the marginalcost c) The average revenue equals the marginal cost d) Revenue equals total cost Question 4 In monopoly in long run equilibrium: a) The firm is productively efficient b) The firm is allocatively inefficient c) The firm produces where marginal cost is less than marginal revenue d) The firm produces at the socially optimal level Question 5 A monopolist faces a) An upward sloping demand curve b) A perfectly elastic demand curve c) A downward sloping demand curve d) A demand curve with a positive price elasticity of demand Question 6 In a monopoly which of the following is not true? a) Products are differentiated b) There is freedom of entry and exit into the industry in the long run c) The firm is a price maker d) There is one main seller Question 7 In monopoly which of the following is true? a) There are many buyers and sellers b) There is one main buyer c) There is one main seller d) The actions of one firm do not affect the market price and quantity Question 8 According to Schumpeter: a) Monopolies are inefficient b) Monopoly profits act as an incentive for innovation c) Monopolies are allocatively efficient d) Monopolies are productively efficient Question 9 A welfare loss occurs in monopoly where: a) The price is greater than the marginal cost b) The price is greater than the marginal benefit c) The price is greater than the average revenue d) The price is greater than the marginal revenue Question 10 In the UK the Competition Commission a) Bans monopolies b) Fines all monopolies c) Prevents firms acquiring more than 25% of the market d) Has the right to investigate monopolies and will assess each one on its own merits