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1. Which of the following are examples of long run internal economies of scale?
i. Mass production using robot machine tool technology
ii. Obtaining lower prices when buying raw materials in bulk
iii. Long run technical change in the industry
iv. The emergence of specialized training institutions for the industry v. Lower borrowing costs for large firms vi. The spreading of fixed costs over a larger output

A) (i), (ii) and (iii) only
B) (i), (ii) and (v) only
C) (i), (iv) and (vi) only
D) (ii), (iii) and (v) only

2. Select the best definition of a regressive tax from the options below:

A) A tax which rises proportionately with income
B) A tax which rises more than proportionately with income
C) A tax on expenditure
D) A tax which rises less than proportionately with income

3. The 'satisfying' model of business behavior states that business will aim to:

A) satisfy shareholders demands to maximize shareholder wealth
B) seek profits as the primary business objective
C) concentrate on the long run growth of sales
D) attempt to meet the differing demands of various stakeholders

4. When faced with a recession, the appropriate combination of policies for a government in order to generate a recovery is

A) Tax cuts, reduced public expenditure and lower interest rates.
B) Monetary expansion, increases in public expenditure and an appreciation of the exchange rate.
C) Tax cuts, monetary expansion and a depreciation of the exchange rate.
D) Reduction of the fiscal deficit and increased money supply.

5. If in the short run a business raises the output of its product then

A) average variable cost will fall over the whole range of output
B) average fixed cost will remain constant over the whole range of output
C) average total cost will fall until constant returns to scale achieved
D) average total cost will initially fall and then rise as output is increased

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