Lesson 4.1.5.6

4.1.5.6 Monopoly and monopoly power Quiz: AQA Economics, Unit 1

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 4.1.5.6, Monopoly and monopoly power: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.

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The 20 questions

  1. Which factor directly increases a firm's monopoly power?

    • Many active competitors
    • High price elasticity
    • Low product differentiation
    • High entry barriers

  2. At what output condition does a monopolist maximise total profit?

    • P = MC
    • MR = MC
    • MR = 0
    • AR = AC

  3. Compared to perfect competition, what market outcome does a monopoly create?

    • Higher price, lower output
    • Higher price, higher output
    • Lower price, lower output
    • Lower price, higher output

  4. Which type of efficiency can a monopoly achieve through long-run supernormal profits?

    • X-efficiency
    • Allocative efficiency
    • Productive efficiency
    • Dynamic efficiency

  5. Which inefficiency occurs when a monopolist sets price above marginal cost?

    • Allocative inefficiency
    • Economies of scale
    • Macroeconomic instability
    • Dynamic inefficiency

  6. A monopolist faces demand P = 100 - 2Q and marginal cost MC = 20. Its profit-maximising output and price are:

    • Q = 40 and P = £20
    • Q = 80 and P = £60
    • Q = 20 and P = £20
    • Q = 20 and P = £60

  7. Using P = 100 - 2Q and MC = 20, the dead-weight loss relative to the competitive outcome (P = MC = 20, Q = 40) is:

    • £400
    • £200
    • £1,600
    • £800

  8. Why does a monopolist's marginal revenue curve lie below its demand curve?

    • Output is fixed
    • Costs increase continuously
    • Price must fall
    • Demand is elastic

  9. What efficiency is missed when a monopolist produces above minimum average cost?

    • Productive efficiency
    • Allocative inefficiency
    • Dynamic inefficiency
    • Regressive inefficiency

  10. What enables a monopolist to maintain supernormal profit in the long run?

    • Homogeneous products
    • Barriers to entry
    • Price taking behaviour
    • Perfect information

  11. A monopolist raises price from £4 to £5, causing sales to drop from 100 to 80. Revenue change is:

    • -£100
    • +£20
    • £0
    • +£100

  12. What term describes the economic loss of total surplus under monopoly?

    • Consumer surplus
    • Supernormal profit
    • Producer surplus
    • Deadweight loss

  13. A firm has greater monopoly power when demand for its product is:

    • Unit elastic
    • Price inelastic
    • Perfectly elastic
    • Price elastic

  14. A monopolist sets a profit-maximising price of £12 where marginal cost is £6. Calculate elasticity.

    • 6
    • 0.5
    • 2
    • 1

  15. How does successful advertising affect the price elasticity of demand for a monopolist's product?

    • Has no effect
    • Makes it infinite
    • Increases elasticity
    • Decreases elasticity

  16. What primary market characteristic causes a natural monopoly?

    • Economies of scale
    • High sunk costs
    • Government licensing
    • Product differentiation

  17. What is a key economic aim of regulating a natural monopoly?

    • Maximise firm profit
    • Prevent exploitation
    • Increase market entry
    • Eliminate fixed costs

  18. Which benefit can a monopoly offer that might offset its allocative inefficiency?

    • Marginal cost pricing
    • Perfect competition
    • Dynamic efficiency
    • Elimination of barriers

  19. If a firm has an average revenue of £50 and an average cost of £30, what is its profit per unit?

    • £80
    • £1,500
    • £20
    • £1.67

  20. What is another term for a firm's ability to set prices above marginal cost?

    • Productive efficiency
    • Market power
    • Monopsony power
    • Elastic demand

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