4 The private firm as producer and employer
1 Which of the following can be defined as a secondary industry?
ABanking
B Tin mining
C Glass making
DRetailing
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
CPartnership
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.
A
B
C
D
Output per month
100
200
300
400
Total cost $
1,000
1,600
2,100
3,200
Total revenue $
1,200
2,800
3,600
4,000
5 At what level of output is average cost at a minimum?
6 At what level of output is average revenue at a maximum?
7 At what level of output is profit maximized?
© Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute
1
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
© Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute
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