THEME 3: CRP + BUS OBJ + EFF

Internal economies of scale occurs when.......

• LRMC falls as output rises

• LRAC falls as output falls

• LRAC falls as there is a growth in the entire industry

• LRAC falls as output rises

• LRAC rises as output rises

Which of the following is NOT an example of INTERNAL ECONOMIES OF SCALE?

• Purchasing

• Cooperation

• Managerial

• Technical

• Financial

Increasing returns to scale means......

• % change in factor inputs = % change in output

• % change in factor inputs > % change in output

• % change in factor inputs < % change in output

• % change in revenue > % change in costs

• % change in quantity > % change in price

External economies of scale is where LRAC falls when.......

• the firm grows

• the economy grows

• the economy contracts

• the industry grows

• the firm declines

The minimum efficient scale is the.................

• scale of output where internal economies of scale have been fully exploited

• scale of output where external economies of scale have been fully exploited

• scale of output where diseconomies of scale have been fully exploited

• scale of output where profit is maximised

• scale of output where revenue is maximised

If you are producing beyond the point MR=MC which of the following would be true?

• There is a marginal loss of one extra unit of production

• There is a marginal profit on one extra unit of production

• Supernormal profits would rise

• Revenue would continue to rise with output

• Marginal profit would be zero

What would happen to price and quantity if you move from profit max output to rev max output?

• fall, fall

• fall, rise

• rise, rise

• rise, fall

• none of the above

What form of profit will you be making if you sales maximise?

• Impossible to say

• Loss

• Supernormal profit where AR<AC

• Supernormal profit where AR>AC

• Normal profit

If a firm is profit satisficing between which two levels of output will they be operating?

• profit max and sales max

• profit max and rev max

• rev max and all efficiency

• prod efficiency and all efficiency

Why would a firm adopt sales max as a strategy?

• To max profit

• To satisfy shareholders

• To max revenue

• To increase market share

• To price at point of allocative efficiency