Tag: A-Level

When will a firm in a perfectly competitive industry cease to produce in the short run?

Select ONE answer:

1. if it earns less than normal profits
2. if total revenue is less than the total cost of production
3. if marginal revenue is less than the average total cost of production
4. if total revenue is less than the total variable cost of production

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

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

The proportion of total employment in an economy accounted for by small firms increases.

Which explanation for this is LEAST likely to be valid?

Select ONE answer:

1. a trend towards the use of sub-contractors to produce specialised components
2. growing technical diseconomies of scale in manufacturing
3. growth of the manufacturing sector and a decline in services
4. the opening up of market niches as real incomes rise

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.

Which statement about the long-run average cost curve of a firm is correct?

Select ONE answer:

1. It falls continuously because of economies of scale.
2. It passes through the minimum points of the firm’s short-run average cost curves.
3. It assumes that factor input proportions are held constant as output increases.
4. It indicates the minimum average cost at which each level of output can be produced.

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

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

An entrepreneur takes out a £500 000 loan at a rate of interest of 10%, and invests a further £500 000 of his own funds to set up a new firm.

In the first year he pays himself a salary of £40 000.

The rate of interest he could have obtained by investing his funds elsewhere is 8%, and the wage he could have earned in alternative employment is £30 000.

By how much will an economist’s calculation of the firm’s first year costs exceed an accountant’s calculation?

Select ONE answer:

1. £20 000
2. £30 000
3. £40 000
4. £50 000

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 2

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

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

To increase the labour force from 31 to 32 workers, an entrepreneur is forced to increase the daily wage rate from £50 to £53.

What is the marginal cost of labour per day?

Select ONE answer:

1. £2
2. £62
3. £96
4. £146

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 – (£50 + £3 * 32 workers)

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