Month: November 2022

A firm operates in a contestable market.

Which statement correctly describes the firm’s conduct?

Select ONE answer:

1. It will set a price to maximise profits in the short run.
2. It will set a price to maximise its revenue.
3. It will set a price to deter the entry of new firms.
4. It will produce at minimum average cost.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

 A firm is operating in an imperfectly competitive market.

Why does the marginal revenue product of a factor of production employed by the firm fall as more of the factor is employed?

Select ONE answer:

1. Its marginal physical product alone falls.
2. Its marginal revenue alone falls.
3. Its marginal physical product and its marginal revenue both fall.
4. The supply price of the factor rises.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

To increase its labour force from 50 to 51 workers, a firm has to increase the daily wage rate from £600 to £610.

What is the marginal cost of labour per day?

Select ONE answer:

1. £10
2. £510
3. £610
4. £1,110

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – £600 + (51 * £10)

This work is licensed under a Creative Commons Attribution 4.0 International License.

A firm is operating in an imperfectly competitive market.

Why does the marginal revenue product of a factor of production employed by the firm fall as more of the factor is employed?

Select ONE answer:

1. Its marginal physical product alone falls.
2. Its marginal revenue alone falls.
3. Its marginal physical product and its marginal revenue both fall.
4. The supply price of the factor rises.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

What is NOT held constant when calculating the income effect of a change in the price of a good?

Select ONE answer:

1. the consumer’s money income
2. the consumer’s preferences
3. the consumer’s real income
4. the prices of other goods

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Economics KS4 and KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.