other

What might help achieve allocative efficiency?

• differentiated products

• government subsidies

• monopsony

• supernormal profits

In 2015, a company electrified the main railway line between two cities in order to decrease the journey time. The work was noisy, expensive and took a long time. What would be the likely outcome of this project?

• External costs increased and private benefits decreased.

• Private benefits decreased and external cost decreased

• Private benefits increased and private costs increased.

• Private costs increased and external costs decreased.

Which measure is specifically designed to reduce divergences between private and social costs?

• equal pay legislation

• minimum wage legislation

• the abolition of tuition fees paid by university students

• the introduction of ‘bus only’ lanes in city centres

Which is an internal economy of scale?

• efficient local transport networks

• improved access to spare parts as a result of industry growth

• lower risks from supplying a wider range of customers

• the training of skilled labour at a college financed by local firms

The diagram shows the position of a profit-maximising firm in a perfectly competitive industry. What is the correct analysis of this position?

• A

• B

• C

• D

When a firm doubles its variable inputs, its fixed inputs are unchanged and output less than doubles. What does this illustrate?

• decreasing average cost

• decreasing marginal cost

• diminishing returns

• diseconomies of scale

Which practices would be classified as price discrimination?

• A

• B

• C

• D

To maximise total revenue, up to which point should a monopolist increase output?

• where marginal revenue equals average revenue

• where marginal revenue is maximised

• where marginal revenue is zero

• where price elasticity of demand is zero

A firm is operating in perfect competition. What will be the effect on the firm’s revenue if it increases its output by 5%?

• Its revenue will be unchanged.

• Its revenue will increase by 5%

• Its revenue will increase by less than 5%.

• Its revenue will increase by more than 5%.

0 A firm successfully engages in a policy of predatory pricing. What will happen to the prices charged by the firm in the short run and in the long run?

• A

• B

• C

• D