1. The diagram shows an indifference map and two budget lines.
When the consumer’s budget line shifts from BL1 to BL2, consumption changes from point W to point Z.

What do these changes indicate about the nature of goods X and Y?

	Good X	Good Y
A	Normal	Inferior
B	Normal	Normal
C	Inferior	Normal
D	Inferior	Inferior

2. Small farmers supply all their rice production to a single buyer.
Which term best describes this market structure?
A monopolistic
B monopoly
C monopsony
D perfect competition

3. A firm operating in an imperfectly competitive market decides to change its objective from sales revenue maximisation to sales volume maximisation.
Why might it have decided to do this?

	Increase short-run profits	Maximise short-run market share	Minimise short-run average costs
A	No	No	Yes
B	No	Yes	No
C	Yes	No	Yes
D	Yes	Yes	No

4. The diagram shows the marginal cost (MC), average cost (AC), marginal revenue (MR) and average revenue (AR) curves of a profit-maximising, monopolistically competitive firm.

Based on its profit, and assuming no market growth, what is likely to happen to the demand for this firm’s output in the long run?
A The short-run profit position will encourage other firms to enter the market and the firm’s
demand curve will shift to the left.
B The short-run profit position will encourage other firms to enter the market and the firm’s demand curve will shift to the right.
C The short-run profit position will encourage other firms to exit the market and the firm’s demand curve will shift to the left.
D The short-run profit position will encourage other firms to exit the market and the firm’s demand curve will shift to the right.

5. In many developed economies, large and small firms often exist side by side in the same industry.
What is most likely to explain the survival of the small firms?
A They each offer a much wider range of products.
B They have a higher minimum efficient scale.
C They pay much higher wages to their staff.
D They provide a more personal level of consumer service.