Lesson 3.4.5

3.4.5 Monopoly Quiz: Pearson Edexcel Economics, Unit 3

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 3.4.5, Monopoly: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 3: Theme 3: Business behaviour and the labour market, written with Revision Ninja.

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The 20 questions

  1. What is a defining characteristic of a pure monopoly?

    • Price taker status
    • Homogeneous products
    • Low entry barriers
    • Single seller

  2. At what output level does a monopolist achieve profit maximisation?

    • AR equals MC
    • MR equals MC
    • AC equals MC
    • MR equals zero

  3. Why is a profit-maximising monopoly allocatively inefficient?

    • AC is minimised
    • MR equals price
    • Price exceeds MC
    • Price equals MC

  4. In third-degree price discrimination, how are market sub-groups separated?

    • By marginal cost
    • By demand elasticity
    • By income tax
    • By product durability

  5. Which condition is required for a firm to practice price discrimination?

    • Zero fixed costs
    • Prevention of resale
    • Perfectly elastic supply
    • Price taker status

  6. A cinema charges students lower ticket prices than adults. What is this strategy called?

    • Predatory pricing
    • Cost-plus pricing
    • Limit pricing
    • Third-degree price discrimination

  7. What causes a natural monopoly to exist in a market?

    • Single buyer power
    • Continuous scale economies
    • Legal patent rights
    • High price elasticity

  8. What main disadvantage do consumers face in a monopoly market compared with perfect competition?

    • Lower profits
    • Lower prices
    • Excess output
    • Higher prices

  9. How can persistent supernormal profit benefit a monopoly firm and its consumers?

    • Funds innovation
    • Eliminates risk
    • Lowers fixed costs
    • Guarantees efficiency

  10. How does a dominant monopoly buyer typically affect its market suppliers?

    • Dictates lower prices
    • Increases supplier profits
    • Eliminates entry barriers
    • Raises production costs

  11. A monopolist faces P = 100 - 2Q and MC = 20. What are the profit-maximising output and price?

    • Q = 10 and P = 80
    • Q = 40 and P = 20
    • Q = 25 and P = 50
    • Q = 20 and P = 60

  12. Using the same monopolist (P = 100 - 2Q, MC = 20), what is the allocatively efficient output where P = MC?

    • Q = 40
    • Q = 50
    • Q = 80
    • Q = 20

  13. Why can a monopolist maintain supernormal profit in the long run?

    • Low price elasticity
    • Perfect information
    • Constant average costs
    • High entry barriers

  14. Why is a monopolist's marginal revenue always below its price?

    • Downward-sloping demand
    • Perfect price elasticity
    • Constant marginal cost
    • Upward-sloping supply

  15. Why is marginal cost pricing unsuitable for regulating a natural monopoly?

    • Reduces consumer surplus
    • Causes capacity shortages
    • Creates supernormal profit
    • Causes firm losses

  16. Which efficiency type might benefit consumers in a monopoly market?

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

  17. A monopolist faces P = 50 - Q with MC = 10. What are the profit-maximising output and price?

    • Q = 20 and P = 30
    • Q = 10 and P = 40
    • Q = 25 and P = 25
    • Q = 40 and P = 10

  18. Using the monopolist in the previous case (P = 50 - Q, Q = 20, P = 30), what is consumer surplus?

    • £200
    • £400
    • £100
    • £600

  19. Under third-degree price discrimination, which consumer group is charged the higher price?

    • Infinitely price elastic
    • Unitary price elastic
    • Less price elastic
    • More price elastic

  20. How can third-degree price discrimination benefit lower-income consumers?

    • Guaranteed profit sharing
    • Lower market prices
    • Reduced product quality
    • Higher wage rates

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