Tackle the Test: Multiple-Choice Questions

1. Question

   Which of the following statements is true of a monopoly as compared to a perfectly competitive market with the same costs?

   
   

   
   

   1. Consumer surplus is smaller.

      
      
   
   

   2. Profit is smaller.

      
      
   
   

   3. Deadweight loss is smaller.

      
      
   
   

   A.

   I only

   B.

   II only

   C.

   III only

   D.

   I and II only

   E.

   I, II, and III

   Which of the following statements is true of a monopoly as compared to a perfectly competitive market with the same costs?

2. Question

   Which of the following is true of a natural monopoly?

   A.

   It experiences diseconomies of scale.

   B.

   ATC is lower if there is a single firm in the market.

   C.

   It occurs in a market that relies on natural resources for its production.

   D.

   There are decreasing returns to scale in the industry.

   E.

   The government must provide the good or service to achieve efficiency.

   Which of the following is true of a natural monopoly?

3. Question

   Which of the following government actions is the most common for a natural monopoly in the United States?

   A.

   prevent its formation

   B.

   break it up using antitrust laws

   C.

   use price regulation

   D.

   public ownership

   E.

   elimination of the market

   Which of the following government actions is the most common for a natural monopoly in the United States?

4. Question

   Which of the following markets is an example of a regulated natural monopoly?

   A.

   local cable TV

   B.

   gasoline

   C.

   cell phone service

   D.

   organic tomatoes

   E.

   diamonds

   Which of the following markets is an example of a regulated natural monopoly?

5. Question

   Which of the following is most likely to be higher for a regulated natural monopoly than for an unregulated natural monopoly?

   A.

   product variety

   B.

   quantity

   C.

   price

   D.

   profit

   E.

   deadweight loss

   Which of the following is most likely to be higher for a regulated natural monopoly than for an unregulated natural monopoly?