Monopoly: Sample Quiz

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1. An example of a negative-sum game is:

poker.
 marriage.
 free trade.
 war.

2. In terms of economic efficiency, what is the problem of monopoly?

The economy operates below the production-possibilities frontier.
 Too few monopolized goods are produced relative to competitive goods.
 Too many monopolized goods are produced relative to competitive goods.
 The rich get too much relative to the poor.

3. Game theory can be used to show:

the interdependence of oligopolists.
 the gains from price discrimination.
 how derived demand is formed.
 how monopoly causes economic inefficiency.

4. Suppose that you are in a class with only two other students. The night before the big test, you get together and decide that because the teacher marks on a curve, no one should study. Your behavior most closely resembles that of:

a monopoly.
 colluding oligopolists.
 monopolistic competition.
 competing monopolists.
 monopsonists.

5. If the class size is 50 instead of 3, it is unlikely that you can act as you do in the previous question because:

it is difficult to enforce this cartel.
 there is interdependence among people.
 knowledge is a public good.
 there are externalities to studying.
 in a more competitive class structure, the law of diminishing returns holds.

Answer the next three questions using this table:

Output
Marginal Cost
Price
1
$6.51
$8.00
2
6.51
7.50
3
6.51
7.00
4
6.51
6.50

6. The economically efficient amount of production is:

1. 2. 3. 4.

7. A profit-maximizing monopoly charging one price would sell:

1. 2. 3. 4.

8. A monopolist that can price discriminate perfectly will sell:

1. 2. 3. 4.

9. The prefix mono- in the word monopoly comes from the Greek word for:

one.
 big or large.
 buyer.
 seller.

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Copyright Robert Schenk