Market Structures - Economics IB HL

_____________ is the average output produced per unit of variable cost.  This is calculated by __________ product divided by the variable factors (V).  Fill in the missing blanks to complete the sentence.

• Average product, marginal

• Average product, total

• Total product, marginal

• Total product, average

The difference between accounting profit and economic profit is ________________

• Accounting costs include opportunity costs

• Economic costs include fixed + variable costs

• Accounting costs include implicit costs + explicit costs

• Economic costs include implicit + explicit costs  

What is the difference between economies of scale (EOS) and diminishing returns?

• Diminishing returns represents the fall in variable costs and EOS the fall in fixed costs

• Diminishing returns shows the reduction in costs when output rises and EOS shows the rise in costs when output rises

• Diminishing returns effects the long run and EOS the short run

• Diminishing returns effects in the short run and EOS the long run

Which of the following is not an economy of scale?

• Greater use of specialisation

• Improved product quality

• Fixed costs being divided by a larger number of units

• Bulk buying

What are diseconomies of scale?

• Disadvantages of being a larger company

• The fall in revenue per unit (MR) when output rises

• The communication problems that arise when a firm grows in size

• The rise in AC when output rises

At which point is a firm at its profit maximising point and its revenue maximising point

• Where AC is at lowest point and where MR is at its maximum

• Where TR is greater than TC and where MR is at its maximum

• Where MC=MR and where MR=0

• Where TR is maximised and where AC are at their lowest

Which of the following combinations of costs are variable?

• Wages, marketing, raw materials

• Wages, stock and electricity which powers the machinery

• Wages of staff, rental, stock

• Maintenance of machinery, stock, raw materials

Productive and allocative efficiency represent the following points on a diagram?

• Where MC=0

• Where MC=MR

• Where MC=P

• Where MC=AC

Perfect competition and monopolistic competitive structures share which of the following characteristics?

• There are no barriers to entry or exit

• They both sell homogenous products

• Highly elastic demand curves

• Productive and allocative efficiency in the long run

A monopolist firm is neither allocatively or productively efficient in the long run. This is because:

• Firm is a price setter and not a price taker

• There are strong barriers to entry to allow the firm to earn abnormal profits

• The product is differentiated giving some brand loyalty

• Firm does not make normal profits in the long run