Understanding Monopolies
This worksheet introduces Grade 9 students to the concept of monopolies in economics, their characteristics, causes, and effects on markets and consumers.
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Understanding Monopolies
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Read each question carefully and answer to the best of your ability. Use complete sentences for short answer questions.
What is a Monopoly?
A monopoly is a market structure characterized by a single seller, selling a unique product in the market. In a monopoly market, the seller faces no competition, as he or she is the sole seller of goods with no close substitute. This allows the monopolist to dictate both the price and quantity of the product.
1. Which of the following best describes a monopoly?
Many sellers, many buyers
Few sellers, many buyers
Single seller, unique product
Many sellers, unique product
2. A key characteristic of a monopoly is that the seller faces:
Intense competition
No competition
Competition from a few large firms
Competition from substitute goods only
3. In a monopoly market, the seller is the sole producer of goods with no close .
4. A monopolist has the power to dictate both the and of the product.
5. Explain why monopolies can be considered harmful to consumers.
6. A natural monopoly occurs when a single firm can supply a good or service to an entire market at a lower cost than two or more firms.
True
False
7. Governments typically encourage the formation of monopolies to promote competition.
True
False
Match each term with its definition.
8. Patent
a. Exclusive control over a commodity or service
9. Monopoly
b. Government regulation aimed at preventing monopolies
10. Antitrust laws
c. Legal right to an invention for a period of time