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4 The private firm as producer and employer

1 Which of the following can be defined as a secondary industry?


A Banking
B Tin mining
C Glass making
D Retailing

2 Which of the following mergers between two firms is an example of vertical


integration?
A A dairy farm and an arable farm
B A restaurant chain and hotel chain
C A bank and a supermarket
D A clothes manufacturer and clothes retailer

3 Which of the following types of business organization is a public sector


organization?
A Public corporation
B Public limited company
C Partnership
D Worker cooperative

4 A firm may substitute more capital for labour in production as:


A The cost of borrowing rises
B Wages rise
C Profits fall
D Labour productivity rises

Questions 5–7 are based on the following table.


Output per month Total cost $ Total revenue $
A 100 1,000 1,200
B 200 1,600 2,800
C 300 2,100 3,600
D 400 3,200 4,000

5 At what level of output is average cost at a minimum?


C
6 At what level of output is average revenue at a maximum? B
7 At what level of output is profit maximized?
C

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© Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute
8 What is most likely to result in the creation of a large firm rather than a small
firm in an industry?
A The product is aimed at consumers on high incomes
B There are markets for the product in many different countries resulting in
high transport costs
C Expensive machinery that reduces the average cost of producing a
standardized product
D There is a large pool of unemployed labour with the skills needed by the
industry

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© Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute