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6. Productive efficiency means:

  • increasing profit
  • reducing the time allocated to a production process
  • using production techniques that do not waste resources
  • increasing variable costs
  • increasing output by increasing input

7. 'substitutes' are:

  • goods which are bought as alternatives to the good in question
  • goods which you buy more of as their price rises
  • goods which are bought in conjunction with the good in question
  • goods which are surplus to requirements
  • none of the above

8. A marginal utility curve:

  • is always a straight line
  • is concave to the origin
  • shows the extra satisfaction from consumption of one more unit of good
  • shows how quantity demanded varies with changes in price
  • shows cumulative satisfaction from consumption of successive units of a good

9. Which of the following will restrict competition in an industry?

  • high prices
  • freedom of entry and exit
  • advertising
  • barriers to the entry of new firms
  • low prices

10. In the event of excess supply over demand the price will:

  • not change
  • fall then rise
  • fall
  • rise
  • rise then fall

11. The desire to buy a good backed by the ability to do so, is:

  • a demand schedule
  • total demand
  • effective demand
  • a demand curve
  • perverse demand

12. A production possibility curve illustrates:

  • maximum production of two outputs from a given resource input
  • combinations of factors required to produce a given output
  • the labour and capital available to a producer
  • maximum possible economic growth
  • factors available from a given cost outlay

13. Which of the following will not cause a shift in the demand curve for new houses?

  • a rise in council rents
  • a discount of £10,000 on the price of new houses
  • a fall in private sector rents
  • a rise in the income of potential buyers
  • a fall in the popularity of home ownership

14. Which of these statements is a valid criticism of the price-system?

  • it cannot provide luxury goods
  • it may lead to great inequality of income and wealth
  • it will often lead to shortages of goods and services
  • it cannot secure the allocation of goods and services
  • long queues for necessities are likely

15. If administration and/or communication becomes more difficult and costly in a very large firm, this is an example of:

  • Diseconomies of scale
  • Over-capacity
  • Internal economies of scale
  • Increasing returns
  • External economies of scale

16. Opportunity cost is related to:

  • the cost of a substitute
  • marginal cost
  • forgone alternatives
  • total revenue
  • average cost

17. In a supply function the relationship between the price and quantity supplied is

  • constant
  • linear
  • direct
  • inverse
  • unclear

18. A 'demand' schedule:

  • is always a straight line
  • none of the above
  • sets out amounts demanded at various prices within a set time period
  • shows diagrammatically how demand changes with income
  • is a particularly difficult itinerary

19. Movement along the demand curve is caused by a change in

  • price
  • income
  • expectation
  • supply
  • quality

20. Fixed costs in the short run

  • must be greater than revenue
  • vary with output
  • are fixed by the government
  • do not vary in direct proportion to output
  • include variable costs