1. Over time the average total cost curve of a firm is lowered.
Which form of efficiency does this represent?
2. The diagram shows the private and social marginal costs and benefits curves for the antibiotics market. The market equilibrium is at point X.
Why does market failure occur?
A There is overconsumption and overpricing.
B There is overproduction and under-pricing.
C There is underconsumption and under-pricing.
D There is underproduction and overpricing.
3. The table shows the results of a cost-benefit analysis of the construction of a new airport.
What is the total value, in US$ million, of all the externalities created by construction of the new
A 30 B 40 C 50 D 90
4. A utility-maximising consumer has a fixed income and can choose between good X and good Y.
The diagram shows her budget line and different consumption combinations (F, G, H, J, K and L) of products X and Y.
Which consumption combinations are currently available to her?:
- A F, G, H and L;
- B F, G, J and L;
- C G, J and L only; or
- D G, H, J and L.
5 Rational consumer Romesh spent 90 rupees buying herb X and spice Y. Both cost 10 rupees per gram.
|Grams purchased||Total Utility – Herb X||Total Utility – Spice Y|
How much of each should he buy?
|Herb X (grams)||Spice Y (grams)|