1. The diagram shows the demand curve for a product.

What is maximised at X?
A marginal revenue
B total revenue
C marginal utility
D total utility

2. The diagram shows a firm’s cost and revenue curves.

Which features are associated with the diagram?
A economies of scale and allocative efficiency
B interdependence and allocative efficiency
C price rigidity and economies of scale
D price rigidity and interdependence

3. In the year ending July 2016, airline fuel prices fell by 20.4% while the price of passenger aircraft increased by around 1.1%.
Assuming no other changes in the passenger airline industry, what was the outcome for fixed
costs and variable costs?

	Fixed costs	Variable costs
A	Decreased	Decreased
B	Decreased	Increased
C	Increased	Decreased
D	Increased	Increased

4. Which feature of production would make it more likely that an industry is a contestable market?
A advertising has established consumer loyalty
B all firms in the industry share research and development
C low fixed costs
D market rivals aim to reduce product differentiation

5. What is an example of backward vertical integration?
A a bakery buying a wheat farm
B a car manufacturer buying a car showroom
C a vineyard buying an apple orchard
D two rival supermarkets joining together

Answers