Economics Flashcard

Front

Which diagram correctly shows the relationship between the average product (AP) and the marginal product (MP) of labour, given that the quantities of other factor inputs remain constant? Options: Diagram A, Diagram B, Diagram C, Diagram D

Back

Diagram D

Front

A firm operates at the maximum point on its average product curve. What necessarily follows?

Back

Average variable cost is at a minimum.

Front

What can be concluded from the demand curve diagram?

Back

Total revenue initially increases as price falls from P₁, but at some point it will decrease.

Front

What does the firm experience as it increases output from Q1 to Q2?

Back

diminishing returns

Front

What is the value of the price elasticity of demand for the product at outputs Q1, Q2, and Q3? Options: Q1: equal to 1, Q2: less than 1, Q3: greater than 1; Q1: greater than 1, Q2: equal to 1, Q3: less than 1; Q1: greater than 1, Q2: less than 1, Q3: equal to 1; Q1: less than 1, Q2: equal to 1, Q3: greater than 1

Back

Q1: greater than 1, Q2: equal to 1, Q3: less than 1

Front

The diagram shows the short-run cost curves and the long-run average cost curve for a firm. What can be concluded from the diagram?

Back

At output Q1, point E represents a productively efficient position.

Front

What is true about the average fixed costs of a firm?

Back

They fall continuously as output rises.

Front

Which concept describes the situation where Firm X can either act independently or work with its rival, with varying profits?

Back

prisoner's dilemma

Front

What describes the pricing method where a firm operates in an imperfectly competitive market, and prices are determined by the maximum price each consumer is willing to pay?

Back

price discrimination

Front

A government divides a nationalised rail service and sells it to five private companies. The largest of these companies dominates the four smaller companies. How will these changes affect the market structure for rail services?

Back

It will create an oligopoly with the possibility of price leadership.