Econ Textbook Questions

Consider a firm with fixed costs of production. Which of the following statements about its average cost (AC) and marginal cost (MC) is correct? a. When AC = MC, the AC curve has a zero slope. b. When AC > MC, the MC curve is downward-sloping. c. When AC < MC, the AC curve is downward-sloping. d. The MC curve cannot be horizontal.

a

Figure 10.3a depicts Julia's indifference curves for consumption in periods 1 (now) and 2 (later). Based on this information, which of the following statements is correct? a. The slope of the indifference curve is the marginal rate of substitution between the consumption in the two periods. b. The marginal return to consumption in period 1 is higher at E than at C. c. Julia's consumption is more equal (more 'smoothed') at C than at E. Therefore she prefers consumption choice C to E. d. Consuming exactly the same amount in the two periods is Julia's most preferred choice.

a

Figure 7.11 depicts the demand curve for Beautiful Cars, together with the marginal cost and isoprofit curves. Suppose that the firm decides to switch from P* = $5,440 and Q* = 32 to a higher price, and chooses the profit-maximizing level of output at the new price. Which of the following statements is correct? a. The quantity of cars produced is reduced. b. The marginal cost of producing an extra car is higher. c. The total cost of production is higher. d. The profit is increased due to the new higher price.

a

Which of the following statements are true? a. If unemployment benefits are increased, the minimum cost of a unit of effort for the employer will rise. b. If the wage doesn't change, employees will work harder in periods of high unemployment. c. If workers continue to receive benefits however long they remained unemployed, an increase in the level of unemployment will have no effect on the best response curve. d. If an employee's disutility of effort increases, the reservation wage will rise.

a, b

Which of the following are reasons why employment contracts are incomplete? a. The firm cannot contract an employee not to leave. b. The firm cannot specify every eventuality in a contract. c. The firm is unable to observe exactly how an employee is fulfilling the contract. d. The contract is unfinished.

a, b, c

Which of the following variables have followed the so-called 'hockey-stick' trajectory—that is, little to no growth for most of history followed by a sudden and sharp change to a positive growth rate? a. GDP per capita b. labour productivity c. inequality d. atmospheric CO2

a, b, d

Which of the following are examples of private property? a. computers belonging to your college b. a farmer's land in Soviet Russia c. shares in a company d. a worker's skills

a, c

Figure 10.4 depicts Julia's choice of consumptions in periods 1 and 2. She has no income in period 1 (now) and an income of $100 in period 2 (later). The current interest rate is 10%. Based on this information, which of the following statements is correct? a. At F, the interest rate exceeds Julia's discount rate (degree of impatience). b. At E, Julia is on the highest possible indifference curve given her feasible set. c. E is Julia's optimal choice, as she is able to completely smooth out her consumption over the two periods and consume the same amount. d. G is not a feasible choice for Julia.

b

The diagram depicts two alternative demand curves, D and D′, for a product. Based on this graph, which of the following are correct? a. On demand curve D, when the price is £5,000, the firm can sell 15 units of the product. b. On demand curve D′, the firm can sell 70 units at a price of £3,000. c. At price £1,000, the firm can sell 40 more units of the product on D′ than on D. d. With an output of 30 units, the firm can charge £2,000 more on D′ than on D.

b, c

The GDP per capita of Greece was $22,494 in 2012 and $21,966 in 2013. Based on these figures, the growth rate of GDP between 2012 and 2013 (to two decimal places) was: a. -2.40% b. 2.35% c. -2.35% d. -0.24%

c

The diagram depicts the marginal cost curve (MC), the average cost curve (AC), and the isoprofit curves of a firm. What can we deduce from the information in the diagram? a. The profit level at A is 500. b. The profit level at B is 150. c. The price at C is 50. d. The price at B is 36.

c

Which of the following statements is correct? a. participation rate = employed ÷ labour force b. unemployment rate = unemployed ÷ population of working age c. employment rate = employed ÷ population of working age d. employment rate + unemployment rate = 1

c

Which of the following statements is correct regarding the effects of a rise in the real wage on the labour supply of a worker? a. The income effect means that the worker will increase his labour supply. b. The substitution effect means that the worker will increase his consumption of free time. c. The income and substitution effects always enhance each other, leading to higher labour supply. d. At high wage levels, the income effect dominates the substitution effect, leading to lower labour supply.

d

Which of the following statements is correct? a. To maximize profits, firms set the wage at the level where the workers are indifferent between working and not working. b. Firms aim to set as high a price as possible. c. In equilibrium, the wage clears the labour market, so there is no unemployment. d. If all firms set the same price and pay the same nominal wage, then the higher the real wage that they pay, the lower is their markup.

d

Look again at Figure 2.1 and Figure 2.19 showing graphs of real wages in England between 1300 and 2000. You are also told the following facts: During the bubonic plague of 1348 and 1351, between one-quarter and one-third of Europe's population died. In the seventeenth and eighteenth centuries, the wages of unskilled workers relative to the incomes of land owners were only one-fifth of what they had been in the sixteenth century. What can we conclude from this information? a. According to the Malthusian model, the fall in the population due to the bubonic plague would have led to an increase in the average productivity of workers, causing the observed rise in the real wage post-plague. b. The doubling and halving of the real wage index over 250 years from around 1350 is contrary to the Malthusian model. c. The fall in the unskilled workers' share of total output in the seventeenth and eighteenth centuries was due to the fall in their average product of labour. d. The fall in the relative wages of the unskilled workers in the seventeenth and eighteenth centuries was one of the factors that led to the eventual shooting up of the real wage in the nineteenth century, seen in the graph.

a

Which of the following statements is correct? a. Consumer surplus is the difference between the consumers' willingness to pay and what they actually pay. b. Producer surplus equals the firm's profit. c. Deadweight loss is the loss incurred by the producer for not selling more cars. d. All possible gains from trade are achieved when the firm chooses its profit-maximizing output and price.

a

Figure 6.4 depicted Maria's best response curve when the expected duration of unemployment was 44 weeks. Which of the following statements is correct? a. If the expected unemployment duration increased to 50 weeks, Maria's best response to a wage of $12 would be an effort level above 0.5. b. If the unemployment benefit was reduced, then Maria's reservation wage would be higher than $6. c. Over the range of wages shown in the figure, Maria would never exert the maximum possible effort per hour. d. Increasing effort from 0.5 to 0.6 requires a bigger wage increase than increasing effort from 0.8 to 0.9.

a, c

Figure 9.16 is the Lorenz curve associated with a particular labour market equilibrium. In a population of 100, there are 10 firms, each with a single owner, 80 employed workers, and 10 unemployed workers. The employed workers receive 60% of the total income as wages. The Gini coefficient is 0.36. In which of the following cases would the Gini coefficient increase, keeping all other factors unchanged? a. A rise in the unemployment rate. b. A rise in the real wage. c. A rise in the workers' productivity while the real wage is unchanged. d. A rise in the degree of competition faced by the firms.

a, c

Which of the following statements is correct? a. If a firm's technology exhibits constant returns to scale, doubling the inputs leads to doubling of the output level. b. If a firm's technology exhibits decreasing returns to scale, doubling the inputs more than doubles the output level. c. If a firm's technology exhibits economies of scale, costs per unit will fall as the firm expands its production. d. If a firm's technology exhibits diseconomies of scale, doubling the inputs leads to less than doubling of the output level.

a, c, d

Based on this figure, which of the following statements are correct? a. At E, demand curve D₁ is less elastic than D₂. b. The elasticity is the same at A and C. c. At E, both demand curves have the same elasticity. d. The elasticity is higher at E than at B.

a, d

Figure 9.16 depicts the model of a labour market where there are 90 million workers. The current labour market equilibrium is at A. Now consider the case where the total labour supply is increased to 100 million. Based on this information, which of the following statements are correct regarding the adjustment process in the labour market? a. Initially, unemployment doubles. b. Higher unemployment results in a reduction in the employment rent enjoyed by workers employed at the current wage. c. The firms are required to raise wages to induce workers to work hard. d. The wage-setting curve shifts downward.

a, d

In which of the following employment situations would the employment rent be high, ceteris paribus? a. In a job that provides many benefits, such as housing and medical insurance. b. In an economic boom, when the ratio of job-seekers to vacancies is low. c. When the worker is paid a high salary because she is a qualified accountant and there is a shortage of accountancy skills. d. When the worker is paid a high salary because the firm's customers know and trust her.

a, d

Figure 2.3 shows different technologies for producing 100 metres of cloth. From the graph, what can we conclude? a. Technology D is more energy-intensive than technology C. b. Technology B dominates technology D. c. Technology A is the cost-minimizing technology at all prices of coal and wages. d. Technology C can sometimes be a cheaper technology than A.

b

Figure 6.6 depicts the efficiency wage equilibrium of a worker and a firm. According to this figure: a. Along the isocost line tangent to the best response curve, doubling of the per-hour effort from 0.45 to 0.90 would lead to an increased profit for the firm. b. The slope of each isocost line is the number of units of effort per dollar. c. At the equilibrium point, the marginal rate of transformation on the isocost line equals the marginal rate of substitution on the worker's best response curve. d. Points C and A both represent Nash equilibria because they are on the best response curve.

b

Figure 7.11 depicts the demand curve for Beautiful Cars, together with the marginal cost and isoprofit curves. At point E, the quantity-price combination is (Q*, P*) = (32, 5,440) and the profit is $63,360. Suppose that the firm chooses instead to produce Q = 32 cars and sets the price at P = $5,400. Which of the following statements is correct? a. The profit remains the same at $63,360. b. The profit is reduced to $62,080. c. The average cost of production is $3,400. d. The firm is unable to sell all the cars.

b

Figure 9.20 depicts the effect of union wage-setting. What can we conclude from this figure? a. Compared to A, at C the effort per hour is higher and therefore the firm's profit is higher. b. The resulting bargained wage-setting curve will be above the wage-setting curve with no union. c. The effect of a strong union will always be to increase unemployment. d. Under union wage-setting, the firm is still setting the wage that maximizes its profits.

b

Look again at Figure 1.11. Which of these conclusions is suggested by the graph? a. The Communist Party rule in the former Soviet Union before 1990 was a complete failure. b. The contrasting performances of Botswana and Nigeria illustrate that rich natural resources alone do not guarantee higher economic growth, but that higher quality institutions (government, markets and firms) may also be necessary. c. The impressive performance of South Korea's economy implies that other countries should copy their economic system. d. The evidence from the Russian Federation and the former Soviet Union after 1990 shows that the replacement of central planning by capitalism led to immediate economic growth.

b

Look at the table. The firm's unit cost of production is £60. Based on this information, which of the following is correct? a. At Q = 100, the firm's profit is £20,000. b. The profit-maximizing output is Q = 400. c. The maximum profit that can be attained is £50,000. d. The firm will make a loss at all outputs of 800 and above.

b

Look at the three isocost lines in Figure 2.8. Based on this information, what can we conclude? a. When the wage is £10 and the price of coal is £5, the combination of inputs at point N is more costly than the inputs at point B. b. Isocosts MN and FG represent the same price ratio (wage/price of coal) but different total costs of production. c. Isocost HJ represents a higher (wage/price of coal) ratio than isocost FG. d. Isocost HJ represents all points that can produce 100 metres of cloth at a particular price ratio.

b

The following diagram depicts the price-setting curve. Based on this information, which of the following statements is correct? a. At point A, the markup is too high, and therefore the firm will raise its price. This leads to lower demand for the good and hence lower employment towards B. b. At point C, the real wage is too low and the markup is too high. Therefore the firm is able to increase profit by lowering prices and hiring more workers. c. Higher competition implies a lower price-setting curve. d. For any given markup, higher labour productivity implies a lower price-setting curve, which means a lower real wage.

b

Which of the following statements are correct? a. Your material wealth is the largest amount that you can consume without borrowing, which includes the value of your house, car, financial savings, and human capital. b. Net income is the maximum amount that you can consume and leave your wealth unchanged. c. In economics, investment means saving in financial assets such as stocks and bonds. d. Depreciation is the loss in your financial savings due to unfavourable movements in the market.

b

Suppose that in a small town a multinational retailer is planning to build a new superstore. Which of the following arguments could be correct? a. The local protestors argue that the close substitutability of some of the goods sold between the new retailer and existing ones means that the new retailer faces inelastic demand for those goods, giving it excessive market power. b. The new retailer argues that the close substitutability of some of the goods implies a high elasticity of demand, leading to healthy competition and lower prices for consumers. c. The local protestors argue that once the local retailers are driven out, there will be no competition, giving the multinational retailer more market power and driving up prices. d. The new retailer argues that most of the goods sold by local retailers are sufficiently differentiated from its own goods that their elasticity of demand will be high enough to protect the local retailers' profits.

b, c

Which of the following statements are correct? a. Contracts are complete in both competitive goods markets and labour markets. b. In a competitive goods market the buyers are price-takers, while in a labour market the buyers of employment (the firms) are price-setters. c. There is no economic rent for either the buyers or the sellers in competitive goods markets. In contrast, in labour markets the sellers receive economic rents. d. Social norms do not affect the outcomes in either goods markets or in labour markets.

b, c

Which of the following are examples of markets? a. wartime food rationing b. auction websites such as eBay c. touts selling tickets outside concert halls d. sale of illegal arms

b, c, d

A shop sells 20 hats per week at $10 each. When it increases the price to $12, the number of hats sold falls to 15 per week. Which of the following statements are correct? a. When the price increases from $10 to $12, demand increases by 25%. b. A 20% increase in the price causes a 25% fall in demand. c. The demand for hats is inelastic. d. The elasticity of demand is approximately 1.25.

b, d

Figure 10.6 depicts Marco's choice of consumption in periods 1 (now) and 2 (later). He has $100 worth of grain in period 1 and no income in period 2. Marco has two choices. In scheme 1, he can store the grain that he does not consume in period 1. This results in a loss of 20% of the grain due to pests and rotting. In scheme 2, he can sell the grain that he does not consume and lend the money at 10%. Based on this information, which of the following statements is correct? a. With scheme 1, if Marco consumes $68 worth of grain in period 1, he can consume $32 worth of grain in period 2. b. With scheme 2, if Marco consumes $68 worth of grain in period 1, he can consume $35 worth of grain in period 2. c. The marginal rate of transformation is higher under scheme 1 than under scheme 2. d. Marco will always be on a higher indifference curve under scheme 2 than under scheme 1.

b, d

Look again at Figure 2.14b which depicts the production function of grain for farmers under average growing conditions with the currently available technology. We can ascertain that: a. In a year with exceptionally good weather conditions, the production function curve will be higher and parallel to the curve above. b. A discovery of new high-yielding crop seeds would tilt the production function curve higher, pivoted anti-clockwise at the origin. c. In a year of bad drought, the production curve can slope downwards for large numbers of farmers. d. If there is an upper limit on the amount of grain that can be produced, then the curve will end up horizontal for large numbers of farmers.

b, d

The following diagram depicts Julia's choice of consumptions in periods 1 (now) and 2 (later) under different interest rates. She has no income in period 1 but an income in period 2 against which she can borrow. Based on this information, which of the following statements are correct? a. A cut in the interest rate increases the marginal rate of transformation of consumption from period 2 to period 1. b. Julia will unambiguously increase her consumption in period 1 after an interest rate cut. c. Julia will unambiguously decrease her consumption in period 2 after an interest rate cut. d. The graph of interest rate (vertical axis) versus period-1 consumption (horizontal axis) is downward sloping.

b, d

Figure 9.11 depicts the labour market model. Consider now a reduction in the degree of competition faced by the firms. Which of the following statements is correct regarding the effects of reduced competition? a. The price-setting curve shifts up. b. The wage-setting curve shifts down. c. The equilibrium real wage falls. d. The unemployment level falls.

c

Figure 9.12 depicts the labour market when there has been a negative aggregate demand shock. Based on this information, which of the following statements is correct? a. The new equilibrium B is a Nash equilibrium. b. At B, unemployment is purely cyclical. c. At B, the firms are able to make higher profits by lowering the wage. d. The adjustment back from B to X is immediate.

c

Figure 9.5 depicts the wage-setting curve and how it is derived using the best response function of the employees and the isocost lines for effort of the employers. a. A cut in the unemployment benefit would shift the best response function to the left, and raise the wage-setting curve. b. If the expected period of unemployment increased, it would shift the best response function to the right, raising the wage-setting curve. c. In a country where the stigma attached to unemployment is high, the wage-setting curve would be lower. d. A sudden drop in the working age population (due, for example, to the retirement of the baby-boomer generation) would shift the wage-setting curve lower.

c

Look again at Figure 1.10, which shows a graph of GDP per capita for West and East Germany, Japan and Spain between 1950 and 1990. Which of the following statements is correct? a. Having a much lower starting point in 1950 was the main reason for East Germany's poor performance compared to West Germany. b. The fact that Japan and West Germany have the highest GDP per capita in 1990 implies that they found the optimal economic system. c. Spain was able to grow at a higher growth rate than Germany between 1950 and 1990. d. The difference in East and West Germany's performance proves that capitalism always promotes rapid economic growth while central planning is a recipe for stagnation.

c

Which of the following is an economic rent? a. The amount you pay your landlord for the use of an apartment. b. The amount you pay to hire a car for a weekend. c. The extra profit that a successful innovator makes on bringing a new product to the market before its competitors. d. The extra profit that a firm makes when it doubles in size and there are no changes to costs or the price for each unit of its output.

c

Which of the following statements about the separation of ownership and control is true? a. When the ownership and control of a firm is separated, the managers become the residual claimants. b. Managers always work to maximize the firm's profit. c. One way to address the problem associated with the separation of ownership and control is to pay the managers a salary that depends on the performance of the firm's share price. d. It is effective for shareholders to monitor the performance of the management, in a firm owned by a large number of shareholders.

c

Which of the following statements is correct? a. Money is the cash (coins and notes) used as the medium of exchange to purchase goods and services. b. Bank money is the total money in the savers' deposit accounts at the bank. c. Base money is broad money minus bank money. d. Liquidity transformation occurs when the banks transform illiquid deposits into liquid loans.

c

Which of the following statements is true? a. A labour contract transfers ownership of the employee from the employee to the employer. b. The office where the employee works is a relation-specific asset, because the employee cannot use it after leaving the firm. c. In a labour contract, one side of the contract has the power to issue orders to the other side, but this power is absent from a sale contract. d. A firm is a structure that involves decentralization of power to the employees.

c

Consider a firm whose unit cost (the cost of producing one unit of output) is the same at all output levels. Which of the following statements are correct? a. Each isoprofit curve depicts the firm's profit for different outputs for a given price of the output good. b. Isoprofit curves can be upward-sloping when at high profit levels. c. Every price-quantity combination lies on an isoprofit curve. d. Isoprofit curves slope downward when the price is above the unit cost.

c, d

Which of the following statements are correct regarding the principal-agent problem? a. A principal-agent problem exists in loans due to a positive possibility of the principal not being repaid. b. The principal-agent problem can be resolved by writing a binding contract for the borrower to exert full effort. c. One solution for the principal-agent problem in loans is for the borrower to provide equity. d. The principal-agent problem leads to credit rationing in the loans market.

c, d

Figure 10.10 depicts four possible feasible frontiers for Marco, who has $100 worth of grain in period 1 (now) and no income in period 2 (later). In scheme 1, he can store the grain that he does not consume in period 1. This results in 20% loss of the grain due to pests and rotting. In scheme 2, he can sell the grain that he does not consume and lend the money at 10%. In scheme 3, he can invest the remaining grain (for example by planting it as seed) for a return of 50%. Finally in scheme 4, he can invest the entire amount of grain and borrow against his future income at 10%. Based on this information, which of the following statements is correct? a. 20% depreciation from storage means that Marco is worse off at H than at his initial endowment of consuming all $100 worth of grain in period 1. b. The consumption choice J can only be attained under scheme 2. c. If the rate of lending increases, the feasible frontier for scheme 2 tilts inwards from the point 100 on the horizontal axis (becomes flatter). d. If the rate of borrowing increases, the feasible frontier for scheme 4 tilts inwards from the point 150 on the vertical axis (becomes steeper).

d

Figure 7.11 depicts the demand curve for Beautiful Cars, together with the marginal cost and isoprofit curves. The quantity-price combination at point E is (Q*, P*) = (32, 5,440). The average cost of producing 50 cars is the same as the average cost of producing 32. Suppose that the firm keeps the price at P = $5,440 but now produces 50 cars instead of 32. Which of the following is correct? a. The firm will now sell all 50 cars at $5,440. b. The firm's profit will increase. c. The firm's profit remains the same. d. The firm's profit is now reduced.

d

Figure 9.8 depicts the market's demand curve and the firm's isoprofit curves. Based on this information, which of the following statements is correct? a. The slope of the demand curve is the firm's marginal rate of substitution. b. Between points A and C, the firm would prefer point A as the output is higher. c. Having chosen its profit-maximizing price p*, the firm would then set its nominal wage level. d. If the firm finds itself producing at point C, it can increase its profit by selling more units at a lower price.

d

In an economy with a population of 100, there are 80 farmers and 20 lenders. The farmers use the funds to finance the planting and tending of their crops. The rate of profit for the harvest is 12.5%, while the interest rate charged is 10%. Compare the following two cases: Case A: All farmers are able to borrow. Case B: Only 50 farmers are able to borrow. Based on this information, which of the following statements is correct? a. The share of total output received by the farmers who can borrow is 25%. b. The Gini coefficient for Case A is 0.5. c. The Gini coefficient for Case B is 0.6. d. There is a 10% increase in the Gini coefficient in Case B compared to Case A.

d

Look again at Figure 2.12 which depicts isocost lines for the 1600s and the 1700s in Britain. Which of the following is true? a. The flatter isocost line HJ for 1600s Britain indicates higher wages relative to the price of coal. b. The increase in wages relative to the cost of energy in the 1700s is represented by the outward shift of the isocost line from HJ to the parallel isocost line going through A. c. Had the wage level fallen together with the falling energy costs (due for example to cheaper transportation), then 1700s Britain would definitely have stayed with technology B. d. The comparison between isocost line FG and the parallel isocost going through B suggests that an innovation rent was earned in 1700s Britain when firms moved from technology B to A.

d

Look again at Figure 2.20, which plots real wages against population in England from the 1280s to the 1860s. According to Malthus, with diminishing average product of labour in production and population growth in response to increases in real wages, an increase in productivity will result in a larger population but not higher real wages in the long run. Based on the information above, which of the following statements is correct? a. Between the 1800s and the 1860s, population grows as real wages rise. This is entirely in line with Malthus's description of the economy's growth. b. There is a clear evidence of a persistent and continuous Malthusian trap between the 1280s and the 1800s. c. The Malthusian traps seem to occur in a cycle of 60 years. d. The Malthusian model does not take into account the possibility of a persistent positive technology shock that may offset the diminishing average product of labour.

d

Maria earns $12 per hour in her current job and works 35 hours a week. Her disutility of effort is equivalent to a cost of $2 per hour of work. If she loses her job, she will receive unemployment benefit equivalent to $6 per hour. Additionally, being unemployed has psychological and social costs equivalent to $1 per hour. Then: a. The employment rent per hour is $3. b. Maria's reservation wage is $6 per hour. c.Maria's employment rent if she can get another job with the same wage rate after 44 weeks of being unemployed is $6,160. d. Maria's employment rent if she can only get a job at a lower wage rate after 44 weeks of being unemployed is more than $7,700.

d

Mr Bond has wealth of £500,000. He has a market income of £40,000 per year, on which he is taxed 30%. Mr Bond's wealth includes some equipment, which depreciates by £5,000 every year. Based on this information, which of the following statements is correct? a. Mr Bond's disposable income is £40,000. b. Mr Bond's net income is £28,000. c. The maximum amount of consumption expenditure possible for Mr Bond is £23,000. d. If Mr Bond decides to spend 60% of his net income on consumption and the rest on investment, then his investment is £9,200.

d

Suppose that the unit cost of producing a pound of cereal is $2, irrespective of the level of output. (This means there are no fixed costs, that is, costs that are present for any level of output, including zero.) Which of the following statements is correct? a. The total cost curve is a horizontal straight line. b. The average cost curve is downward-sloping. c. The marginal cost curve is upward-sloping. d. The average cost and the marginal cost curves coincide.

d

The following diagram depicts Julia's choice of consumption in periods 1 (now) and 2 (later) when the interest rate is 78%. She has no income in period 1 and an income of $100 in period 2. She chooses the consumption choice G. Based on this information, which of the following statements regarding Julia's balance sheet is correct? a. The asset after borrowing but before consumption in period 1 is 56. b. The net worth after consumption in period 1 is 0. c. The liability before consumption in period 2 is 35. d. The asset after consumption but before repaying the loan in period 2 is 62.

d

The following example is a simplified balance sheet of a commercial bank. Based on this information, which of the following statements is correct? a. The bank's base money consists of cash and reserves and financial assets. b. Secured borrowing is borrowing with zero default risk. c. The bank's net worth is its cash and reserves of £2 million. d. The bank's leverage is 33.3.

d

This figure shows the marginal cost and marginal revenue curves for Beautiful Cars. Which of the following statements is correct, based on the information shown? a. When Q = 40, the marginal cost is greater than the marginal revenue so the firm's profit must be negative. b. Revenue is greater when Q = 10 than if Q = 20. c. The firm would not choose to produce at point E because marginal profit is zero. d. Profit is greater when Q = 20 than when Q = 10.

d

What does UK GDP per capita measure? a. the total output of London's economy b. the average disposable income of a UK resident c. the total output of the UK residents, divided by the number of the residents d. the total output of the UK's economy, divided by the country's population

d