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Economic Theory

b) £20 profit is made;
c) £20 loss is made;
d) £250 loss is made.

2. When does the break-even point fall?
a) when costs go up;

b) when costs go down;
c) when costs change;
d) whet price go up.

3. If the average variable costs £10, average selling price is £25 and
fixed costs are £60,000, then what is the break-even output?
a) 4,000;

b) 5,000;
c) 6,000;
d) 8,500.

4. How do you calculate total revenue?
a) quantity sold * average price;
b) quantity sold * average cost;

c) quantity sold * average profit;
d) total cost-profit.

5. Which of the following best describes pure profit?

a) the difference between variable and fixed costs;
b) total revenue minus total quantity;

c) total revenue minus implicit and explicit costs;
d) the revenue generated as a result of economies of scale;
e) the revenue generated as a result of quantity sold.

6. Which of the following will shift a cost curve for a T-shirt
manufacturer?
a) the price of cotton increases;

b) the minimum wage level increases;
c) the price of power increases;
d) the price of ink increases;
e) all of the above.

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