1. What would be a reason why small firms do not survive?
A In certain industries, there are economies of scale.
B Small firms often supply personal services to consumers.
C Small firms often supply products, the size of the market for which is limited.
D Small owner-managed firms involve less risk.

2. What is the implication of a dominant oligopoly following a limit pricing policy?
A The industry will be restricted to a target number of firms.
B The industry will contract as rival oligopolists are eliminated.
C The oligopolist will achieve a satisficing level of profit.
D The oligopolist will sacrifice short-term profit for long-term profit.

3. Transport economists estimate the price elasticity of demand for private car use is very low.
What would be the most effective way of reducing road traffic congestion?
A banning private cars and lorries from town centres
B introducing a subsidy to lower the price of using bicycles
C introducing road pricing on all main roads
D subsidising public transport such as trains and buses

4. What would help to explain why there was a reduction in wage inequality in a country during the post-2008 economic recession?
A a decline in the share of wages in national output
B a decline in trade union bargaining power
C the existence of a minimum wage
D the trend towards later retirement

5. How is marginal revenue product calculated?
A marginal physical product × marginal revenue
B marginal physical product ÷ price
C total physical product × marginal cost
D total physical product ÷ marginal cost

Answers