Section 3 MCQ (from PYP 2003-2005)

There is an increase in interest rates. What is the likely effect on saving and borrowing?

• A

• B

• C

• D

The diagram shows the costs of a firm. What is the firm's total variable cost at an output of 100 units?

• $100

• $500

• $10 000

• $50 000

In a company fixed costs are a high proportion of the total costs. What will result in the short run if production is cut by 50%?

• Average costs will rise.

• Fixed costs will fall.

• Total costs will remain constant.

• Variable costs will rise.

The retail store Woolworth's has expanded the range of products it sells to include sweets, toys, and compact discs. What term describes this change?

• diversification

• integration

• merger

• specialisation

What is an external economy of scale?

• buying machines from other companies

• carrying out research with other companies

• lending money to other companies

• selling output to other companies

What is unlikely to be a feature of a large firm in a monopoly position in a market?

• It achieves economies of scale.

• It will attract government attention.

• It charges high prices.

• It experiences intense competition in that market.

The diagram shows the average earnings per hour of postal workers between 1999 and 2001. Which of the following could explain the above diagram?

• a reduction in trade union membership

• the introduction of more efficient work practices.

• the employment of more part-time workers.

• an increase in the number of hours worked.

The table shows a firm's total revenue and total cost. What level of output gives maximum profit?

• 10 units

• 20 units

• 30 units

• 40 units

The table shoes the costs incurred by a firm producing computers. What are fixed costs if 3000 computers are produced?

• $20 000

• $ 1 430 000

• $ 1 450 000

• $ 4 020 000

What is a feature of economies of scale but not diseconomies of scale?

• They are caused by management problems.

• They operate in the short run.

• They lead to failing average costs.

• They result in rising average revenue.