Economics: Revenue, Costs & Profit

Revenue is the income gnerated from the sale of

• goods and sevices in a market

• goods and services within an industry

• None of the above

• goods from the least cost method of production

• All of the above

Average revenue (AR) is the same thing as

• price per unit

• TR/Output

• the extra revenue received as a result of selling one more unit of output

• Total revenue less marginal revenue

When demand is price elastic, a reduction in price leads to

• increase in revenue

• increase in revenue initially, and a subsequent fall in the long run

• reduction in total revenue

• exit from the market

When marginal revenue is negative, a fall in price per unit

• lowers the industry's marginal efficiency scale

• raises price of complementary goods

• shifts the demand curve to the left

• leads to a fall in total revenue

In a perfectly competitive market,

• duopoly reigns

• Totall revenue = average revenue

• average revenue < marginal revenue

• average revenue = marginal revenue

• monopsony reigns

Which of the following does not illustrate the concept of normal profit?

• TR=TC

• AR=AC

• MR=MC

• Zero Economic Profit

Which of the following does not illustrate the concept of profit maximisation?

• MR=MC

• The difference between TR and TC is the greatest

• Economic profit is at least zero or greater

• Total revenue is maximised.

Which of the following can be a firm's short run objective?

• Profit Maximization

• Revenue Maximization

• Profit Satisficing

• Market Share Dominance

• All of the above

Which of the following illustrates the concept of internal economies of scale?

• Falling average cost as output increases

• Falling average cost as the industry expands

• Falling fixed cost as output increases

• Rising average cost as output increases

Which of the following is not a reason for firms to stay small in size

• Market has a small or niche demand

• Production of good requires high degree of personalisation

• Average cost increases as firm expands output

• MES occurs at a very large output