CIMA Exam CIMAPRA17-BA1-1 Topic 1 Question 70 Discussion

Actual exam question for CIMA's CIMAPRA17-BA1-1 exam

Question #: 70
Topic #: 1

[All CIMAPRA17-BA1-1 Questions]

Why do monopoly market structures charge higher prices than would be charged by more competitive market structures?

AThey are more likely to suffer from diseconomies of scale

BThey must recover their higher research and development expenditures

CThey can increase profits by reducing output to force prices higher

DThey have barriers to entry that stop customers going to new markets

Show Suggested Answer

Suggested Answer: A

by Kattie at May 25, 2023, 07:40 AM

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Velda

1 months ago

Wait, are we sure this isn't a trick question? What if the monopoly is just really, really efficient and that's why they can charge more? Just playing devil's advocate here.

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Yolande

11 days ago

C) They have barriers to entry that stop customers going to new markets

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Merlyn

16 days ago

B) They must recover their higher research and development expenditures

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Phyliss

17 days ago

A) They can increase profits by reducing output to force prices higher

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Kristian

2 months ago

Barrier to entry, huh? Sounds like a monopoly is just a really good business model. Alright, I'm going with D.

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Herschel

8 days ago

Exactly, that's why they can charge higher prices compared to more competitive markets.

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Mona

25 days ago

That's right, barriers to entry give monopolies more control over prices.

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Billye

1 months ago

Monopolies can prevent new competitors from entering the market.

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Mauricio

2 months ago

Hmm, I'm not so sure. What if the monopoly has to spend a ton on R&D to stay ahead? Wouldn't that justify the higher prices? Just a thought.

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Ressie

3 days ago

D) They have barriers to entry that stop customers going to new markets

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Roosevelt

5 days ago

C) They can increase profits by reducing output to force prices higher

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Marci

1 months ago

B) They must recover their higher research and development expenditures

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Emelda

2 months ago

A) They are more likely to suffer from diseconomies of scale

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Cory

2 months ago

Option C is the correct answer. Monopolies reduce output to drive up prices and maximize profits. It's all about that bottom line.

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Bobbie

2 months ago

But isn't it unfair to consumers who have no choice but to pay those high prices?

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Oliva

2 months ago

That's true, they can control the market and set prices as they please.

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Irving

2 months ago

Monopolies can charge higher prices because they have no competition.

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William

2 months ago

Monopolies can charge higher prices because they have no competition to keep them in check. Basic economics, really.

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Micah

27 days ago

Yeah, they don't have to worry about losing customers to competitors.

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Micah

1 months ago

That's true, monopolies can pretty much set their prices however they want.

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Alpha

2 months ago

But they also have barriers to entry that prevent new competitors from entering the market.

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Kimbery

3 months ago

That's true, they can increase profits by reducing output and forcing prices higher.

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Shawana

3 months ago

Monopolies can charge higher prices because they have no competition.

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