NEC preparation 5

Which one of the following is the most likely disadvantage that may arise from the growth in the size of a firm?

• An increase in the size of the marketing budget.

• The need to purchase components in large quantities.

• Problems in coordinating different parts of the business.

"The change in a firm's total revenue that results from employing one additional unit of a resource, when all other factors are kept constant." The statement above describes

• marginal product

• marginal revenue product

• marginal revenue

• marginal utility

A basic role of entrepreneurs in the economy is to

• create dividends for investors in new businesses.

• buy and sell the common stocks of new corporations.

• take the risks associated with starting new businesses.

• show government what new products the economy can produce and sell.

Significant barriers to entry exist in which of the following market structures?

• Oligopoly only

• Monopoly only

• Monopolistic competition and monopoly

• Oligopoly and monopoly

Which one of the following combinations of policy instruments involves only the use of monetary policy measure?

• Lower interest rates and a reduction in the exchange rate

• Lower interest rates and a budget deficit

• Lower taxes and more government spending

Supply-side policies are aimed mainly at

• reducing the government's budget deficit.

• improving the underlying trend rate of economic growth.

• combating cyclical unemployment

Which best measures a nation's standard of living over time?

• Rate of inflation.

• Rate of unemployment.

• Real income per capita.

• Money income per capita.

What is an essential feature of a market economy?

• Central planners determine what, how and for whom to produce.

• It aims for equality in the distribution of goods and services.

• The market price reflects both the private and external costs of production.

• The price mechanism sends signals to consumers and producers to allocate resources.

What is a definition of market failure?

• market forces of demand and supply do not allocate resources efficiently

• not all consumers can afford to buy the goods they would like

• private benefits of consumption are greater than external benefits

• public goods are only provided by a government

 In every economic system, people must choose how to

• satisfy all of the wants of society.

• make the best use of scarce resources.

• create an equal distribution of income.

• save money to reduce the national debt.