1. The schedule shows the short-run marginal cost of producing good X.

Units of X	1	2	3	4	5
Marginal cost ($)	45	40	30	20	20

Given that the total fixed cost is $50, which level of output minimises average total cost?
A 2 units B 3 units C 4 units D 5 units

2. What must be found in two markets for price discrimination to be profitable?
A different price elasticities of demand
B different price elasticities of supply
C different producers
D different products

3. A firm maximises its profits by maximising its total revenue.
What does this imply?
A Average fixed cost is zero.
B Average revenue is equal to average cost.
C Marginal cost is zero.
D Marginal revenue is greater than marginal cost.

4. Technological change reduces the minimum efficient scale of production in an industry.
What is likely to result?
A increased number of firms and increased size of firms
B increased number of firms and reduced size of firms
C reduced number of firms and increased size of firms
D reduced number of firms and reduced size of firms

5. The diagram shows the costs and revenue for a firm in imperfect competition.
Which level of output would produce only a normal profit?

Answers