Economics
Firms, costs and competition
- 1.
Explain the difference between productive and allocative efficiency for a firm.
[2 marks] · no calculator - 2.
Fictional case: Kero produces 50 units at price 18. Fixed cost is 200 and variable cost is 500 currency units. Calculate total cost, average cost and profit.
[3 marks] - 3.
Fictional case: a large bakery installs specialised ovens and negotiates bulk flour discounts, but its managers become slow to coordinate. Analyse two economies of scale and one diseconomy in this case.
[4 marks] · no calculator - 4.
Fictional firm faces P = 60 - Q and total cost TC = 100 + 20Q. With MR = 60 - 2Q and MC = 20, calculate profit-maximising output, price and profit; explain why using P = MC would be wrong for this firm's objective.
[4 marks] - 5.
Fictional case: two bus operators propose merging, promising shared depots but leaving only one operator on local routes. Evaluate whether the merger benefits passengers.
[4 marks] · no calculator - 6.
Fictional case: one digital platform dominates bookings, yet new entrants can lease software cheaply. Users value its large existing network and cannot transfer reviews. Evaluate whether cheap software makes this market contestable.
[4 marks] · no calculator
Marking points are indicative, not an official mark scheme. Accept equivalent valid methods and supported interpretations that address the task; award each mark once without requiring the model wording.