Section 3-4 (C22&23)

Front

A firm's fixed cost is $4000 a week. The average total cost of producing its output is $5 and its average variable cost is $3 a week. What is its weekly output?

Back

2000

Front

What is the average fixed cost of producing five units of output?

Back

$4

Front

Which cost is a variable cost? Options: interest payments on a bank loan, pensions paid to former employees, rent paid to a landlord, wage of workers paid on a piece rate basis

Back

wage of workers paid on a piece rate basis

Front

What is meant by fixed costs?

Back

costs that only change with output in the long run

Front

What is a motive for privatising an industry?

Back

to reduce productive inefficiency

Front

A firm sells 30 units of output which cost $600 to produce and it makes a total profit of $150. What is the firm's average revenue?

Back

$25

Front

What is a characteristic of a monopoly?

Back

high barriers to entry and exit

Front

Why may a monopoly benefit consumers?

Back

it may spend some if its supernormal profits on research and development

Front

Which combination of circumstances is most likely to encourage a firm to invest? Rate of interest Retained profits

Back

low high

Front

What is meant by profit satisficing?

Back

forging some profit to achieve other goals