Economics 2 0.0 / 5 ? EconomicseconomicsUniversityAll boards Created by: owenatkinson1Created on: 19-05-19 15:06 If an industry is characterised by a few very large firms and barriers to entry, then it is likely to have economies of scale and decreasing costs 1 of 19 Normally, firms aim to: Maximise profits 2 of 19 A firm will produce those goods which: enable it to make the greatest return on capital 3 of 19 At the equilibrium price: the quantity demanded is equal to the quantity supplied 4 of 19 If the elasticity of supply is 2.5, when the price of a commodity rises by 1%, sellers: increase supply by 2.5% 5 of 19 When demand is price-inelastic, a change in price causes: a less than proportionate change in quantity demanded 6 of 19 In the property market: the long run supply curves are more elastic than the short run supply curves 7 of 19 To continue in operation in the short run, a firm must cover its: variable costs 8 of 19 Marginal cost may be defined as being the cost of producing: one more (or less) unit of a commodity 9 of 19 Costs and benefits which are outside the market system are known as: externalities 10 of 19 To find the market supply curve: find total output of all firms at varying prices 11 of 19 The long run may be defined as: the period in which all factors of production are variable 12 of 19 In general, increased competition in an industry will tend to: reduce prices 13 of 19 In perfect competition firms: have no power to affect the market price 14 of 19 Normal profit is: the minimum amount of profit which is necessary to keep the firm in the industry 15 of 19 Variable costs: vary with output 16 of 19 In November 2017, the Bank of England Base Rate was increased to: 0.5% 17 of 19 Characteristics of perfect competition include: No barriers to entry or exit 18 of 19 An increase in central bank interest rates is intended to: increase saving and decrease investment 19 of 19
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