Monopoly and Market Power Quiz
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Questions and Answers

What is the key characteristic of a monopoly?

  • Multiple sellers with similar products
  • A single seller dominates the market with no close substitute (correct)
  • Many sellers with identical products
  • A few sellers with slightly different products

    • What creates market power for a monopoly?

  • High number of competitors
  • Barriers to entry (correct)
  • Frequent price changes
  • Low market share

    • How does a monopoly maximize profit?

  • By producing at the lowest possible cost
  • By equating Marginal Revenue (MR) to Marginal Cost (MC) (correct)
  • By producing at the highest possible cost
  • By setting prices higher than Marginal Cost (MC)

    • What happens to the demand curve in a monopoly?

    <p>It decreases due to the absence of close substitutes</p> Signup and view all the answers

    What is the significance of Marginal Revenue (MR) in a monopoly?

    <p>It is used to determine the quantity to produce by equating it with Marginal Cost (MC)</p> Signup and view all the answers

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