1. The diagram shows a consumer’s total utility.

Which curve would mean that marginal utility is diminishing?
A TU₁ B TU₂ C TU₃ D TU₄

2. Which is an internal economy of scale?
A cheaper loans from a local bank resulting from a merger
B efficient local transport networks
C specialist training facilities provided by a local college
D the reputation of an area for a particular product.

3. Why might a firm continue in production in the short run even though the price of its product has fallen below its average total costs of production?
A It anticipates a rise in variable costs.
B It expects the fall in price to be temporary.
C It has large fixed costs of production.
D It has no control over the price of its product.

4. The diagram shows that a producer increases output from Q1 to Q2.

What will be the result?

	Total profit	Total revenue
A	Increased	Increased
B	Increased	Reduced
C	Reduced	Increased
D	Reduced	Reduced

5. What is true about economies of scale but not diseconomies of scale?
A They occur because average revenue is increasing.
B They occur because of management policy changes.
C They occur in the short run.
D They occur with decreasing average cost.