Question 4 Schumpeter argued that monopolists eventually fall because: Entrepren

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Question 4

Schumpeter argued that monopolists eventually fall because:

Entrepreneurs find away to innovate around the monopolist's control over their market.

Eventually an entrepreneur finds a way to compete directly with the monopolist.

Consumers tire of the monopolist's product and they stop purchasing it.

The government outlaws the monopoly.

Consumers band together to counter the monopolist's control over the product.

1 points   

Question 5

A monopolist can earn excess profits if:

Their average total costs are low enough.

They are able to charge a price above their average total cost.

Their marginal costs are low enough.

They are able to set their price equal to their average total cost.

They are able to set their price above their average variable cost.

Question 8

A monopolist can increase their profits by bundling their products because bundling allows them:

To price discriminate and charge consumers higher prices based on their willingness to pay.

Create different varieties of their product at different price and quality levels.

Create different varieties of their product at the same price and quality level.

Create both different varieties of the product at different price and quality levels and at the same price and quality level.

To force consumers to pay for products they have little use for to obtain something that has great value to them.

1 points   

Question 9

An example of versioning is when:

An airline charges different fares to leisure and business customers.

A printer company disables a feature on its printer so as to be able to sell it to different consumers for different prices.

A software company leases rather then sells its software so as to charge higher fees.

A software company creates both a full featured and a limited featured edition of their software program so as to be able to charge different prices to different buyers.

An airlines creates a frequent flier program to increase customer loyalty.

Entrepreneurs find away to innovate around the monopolist's control over their market.

Eventually an entrepreneur finds a way to compete directly with the monopolist.

Consumers tire of the monopolist's product and they stop purchasing it.

The government outlaws the monopoly.

Consumers band together to counter the monopolist's control over the product.

Explanation / Answer

4. Option 1: Entrepreneurs find a way to innovate around the monopolist's control over their market.

Explanation: Schumpeter argued that through the process of creative destruction, entrepreneurs find out more innovative and efficient ways through which they can destroy all inefficient market forms including monopolies. So, all monopolies eventually fall because new entrepreneurs eventually find a more innovative way to serve the market.

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