SQA Advanced Higher Economics Economic Markets: Structures and Intervention overview quiz quiz

Where average cost is at its lowest possible point

Where marginal cost equals marginal revenue, with marginal cost rising

Where total revenue is at its highest possible level

Where average revenue equals average cost exactly

Because of the law of diminishing returns to the variable factor

Because fixed costs increase as more output is produced

Because the price of the product falls as output rises

Because economies of scale always lower unit costs

Average revenue is below average cost

Average revenue exactly equals average cost

Average revenue is above average cost

Marginal cost is below marginal revenue

Downward sloping, because it must cut price to sell more

Vertical, because output is fixed by the industry

Upward sloping, because higher prices attract more buyers

Horizontal, because the firm is a price taker

Government regulation of the prices that firms may charge

Free entry and exit, which competes away any abnormal profit

Collusion between the firms to keep prices low

The high barriers to entry protecting incumbent firms

Price equals marginal cost at the equilibrium output

Average cost is above marginal cost at all outputs

Firms earn large abnormal profits to fund innovation

Output is restricted below the competitive level

Because it always produces at minimum average cost

Because it faces a horizontal demand curve

Because high barriers to entry keep rivals out

Because it is legally required to charge a low price

Produces more output at a lower price

Produces the same output at the same price

Produces more output at a higher price

Restricts output and charges a higher price

The firm must be a price taker in a competitive market

The firm must be able to separate markets and prevent resale

All buyers must have exactly the same elasticity of demand

The product must be identical across all firms in the market

Inelastic, because rivals match a price cut

Elastic, because rivals ignore a price cut

Perfectly elastic at the current price

Unrelated to the behaviour of rival firms

Charge the high price regardless of the rival's choice

Charge the low price, because it pays whatever the rival does

Leave the market to avoid any competition at all

Always exactly copy whatever the rival did last time

It faces a horizontal demand curve like a price taker

It is protected by very high barriers to entry

The downward-sloping demand curve is tangent to AC left of its minimum

It earns large abnormal profits in the long run

The actual number of rival firms currently in the market

The credible threat of hit-and-run entry when barriers are low

Government ownership of the dominant firm

The presence of very high sunk costs of entry

Marginal social benefit exceeds marginal private benefit

The market under-produces the good relative to the social optimum

Marginal social cost exceeds marginal private cost, so the market over-produces

There is no divergence between private and social costs

A market allocates resources without any state involvement

Intervention to correct a market failure produces a net welfare loss

A monopoly earns abnormal profit behind barriers to entry

The government provides a public good funded by taxation

Falls automatically as wages rise in every market

Depends on the demand for the goods and services labour produces

Is fixed by the government's minimum wage legislation

Comes only from the supply of workers willing to work