1. When the price of a good falls, the overall effect on the quantity demanded can be separated into income and substitution effects.
Which statement describes a Giffen good?
A The income effect is irrelevant for a Giffen good.
B The income effect works in the same direction as the substitution effect.
C The income effect works against the substitution effect and is of a greater magnitude.
D The income effect works against the substitution effect but is of a smaller magnitude.

2. Here are some details of the soft drinks industry in a country:

Number of firms: 250; Number of brands: 1000; 5 firm concentration ratio: 65%

Which market structure best describes the country’s soft drinks industry?
A monopoly
B monopolistic competition
C oligopoly
D perfect competition

3. A rock band is due to play at a concert hall. In order to create a good atmosphere, the band’s aim is to sell all the tickets. Ticket prices are set at the highest price that ensures all tickets will be
sold.
What is the motivation for this price strategy?
A profit maximisation
B revenue maximisation
C sales maximisation
D satisficing

4. What would be most likely to allow the survival of small firms in an economy?
A an increase in the cost of borrowing from commercial banks
B an increase in personal services as a share of GDP
C an increase in the rate of change of information technology
D an increase in the ratio of capital to labour employed in an economy

5. What is a condition for operating a successful cartel?
A a large number of firms in the industry
B having a differentiated product
C low barriers of entry to the industry
D strictly enforced production quotas