IAL Eco Unit 3 Revision 3

In 2020 the Turkish airline AtlasGlobal ceased its operations. Which one of the

following will cause a firm to shut down in the short-run?

• Average revenue was below marginal revenue

• Average revenue equalled marginal cost

• Average revenue was below average variable cost

• Average revenue equalled average cost

The diagram shows the short-run cost and revenue curves for a hairdresser operating

in a monopolistically competitive market in Mumbai.

Which one of the following can be deduced from the diagram?

• At output Q1 the firm is maximising its total revenue

• At output Q1 the firm is minimising its average cost

• At output Q1 the firm is making normal profit

• At output Q1 the firm is making supernormal profit

The table shows the number of international subscribers for Netflix and its total

revenue for Q4 in the years 2017 to 2020.

Which one of the following can be deduced from the table?

• Average revenue was $32.62 in Q4 2017

• Average revenue was $29.70 in Q4 2018

• Average revenue was $32.72 in Q4 2019

• Average revenue was $30.07 in Q4 2020

Total revenue for American Airlines fell from $45.77 billion in 2019 to $17.34 billion in

2020. In response, American Airlines made 31 000 staff redundant.

Which one of the following was the most likely reason for these staff redundancies?

• The number of airline passengers rose

• The derived demand for labour fell

• Government employment subsidies to airlines increased

• Taxation on airline employees decreased

The diagram shows an increase in the minimum wage in British Columbia, Canada. In

2021 it rose from $14.60 to $15.20 per hour.

Which one of the following is the most likely impact of this increase in the minimum

wage on shop assistants in the retail industry in British Columbia?

• Unemployment would rise to Q1–Q4

• Unemployment would rise to Q2–Q3

• The demand for labour would extend from Q1 to Q2

• The supply of labour would contract from Q4 to Q3

A small fruit farm in Namibia is operating in a perfectly competitive market. Which of

the following is true for such a firm in long-run equilibrium?

• Allocative efficiency No

  Profit Supernormal

• Allocative efficiency No

  Profit Normal

• Allocative efficiency Yes

  Profit Supernormal

• Allocative efficiency Yes

  Profit Normal