Costs and Revenue 1

at output levels greater than Z which of the following correctly identifies what will happen to the cost?

• AFC Falls

  AVC Falls

  MC Rises

• AFC Falls

  AVC Rises

  MC Rises

• AFC Rises

  AVC Rises

  MC Falls

• AFC Rises

  AVC Rises

  MC Rises

Which of the following is likely to be a fixed cost for starbucks?

• coffee

• milk

• packaging

• rent

Since 2016 oil, copper, iron ore have fallen significantly in price. These are major costs for BAe and BMW, both manufacturing firms. What is the likely impact of lower commodity prices?

• Output Rise

  Profits Rise

• Output Constant

  Profits

  Constant

• Output Fall

  Profits Fall

• Output Constant

  Profits Fall

• Output Fall

  Profits Constant

The data shows the number of new technology companies based in East End Tech City, a technology cluster in East London. The data suggests East Londo is experiencing?

• External Economies of Scale

• high commercial barriers to entry

• increasing marginal returns

• financial diseconomies of scale

• increasing merger activity

German Airline Lufthansa owned BMI, a loss making UK airline. Lufthansa announced plans to sell BMI in November 2011. Which is a reason for the sale?

• BMI part of the business faced increasing marginal returns

• BMI experienced falling marginal costs

• To benefit from conglomerate intergration

• to increase market concentration

• to reduce diseconomies of scale

In October 2011 Boeing 787 Dreamliner entered commerical operation. The firm announced that its fixed costs of development were higher than expected. If the firm is profit maximising the higher fixed costs is likely to have the following impact

• Output no change

  Price No Change

  Profit No Change

• Output no change

  Price No Change

  Profit Fall

• Output no change

  Price Rise

  Profit No Change

• Output Fall

  Price Rise

  Profit No Change

• Output Fall

  Price Rise

  Profit Fall

A pizza restaurant faces downward sloping demand curve. Which of the following is necessarily true

• Marginal revenue positive then negative as price falls

• Revenue max occurs at a price of $6

• Sales are maximised at a price of $6

• Average revenue will equal zero where ped is unitary

• cutting the price from $6 to $5 will increase profit