1. When will a cartel find it most difficult to fix the market price of its product?
|Proportion of firms in the industry that are members of the cartel||Barriers of entry into the industry|
2. The diagram shows the cost and revenue curves of a monopoly:
What is the firm’s objective if it produces output OX?
A to achieve normal profit
B to maximise profit
C to maximise total revenue
D to minimise average cost
3. Which policy is not designed to correct a market failure?
A government provision of healthcare
B price controls on large firms
C regulations to limit smoke pollution
D removing import quotas
4. A chemical firm produces toxic fumes that impose costs on society. The diagram shows the free market equilibrium of the firm’s product at P1Q1:
The government imposes a tax on the firm of XY.
How would this improve resource allocation?
A It will internalise the external benefit.
B It will internalise the external cost.
C It will internalise the private benefit.
D It will internalise the private cost.
5. The level of benefit paid to an individual receiving a means-tested benefit depends on the individual’s
B family size.