Cima C04 Exam Question No 30

Question No 30:

In order to remain in business in the short run, a firm’s revenue must be sufficient to cover:

A. Its fixed costs
B. Its variable costs
C. Its total costs
D. Its total costs minus normal profit

Answer: B

Cima C04 Exam Question No 29

Question No 29:

All of the following are internal economies of scale for a firm EXCEPT which ONE?

A. The firm is able to reduce administration costs per unit of output when it opens a second production plant.
B. The firm can buy raw materials from other firms at lower prices when it buys in bulk.
C. TV advertising costs can be spread over a larger output.
D. Training costs are reduced when the firm can draw on the development of pool of skilled labour in the region due to colleges setting up training courses for the industry.

Answer: D

Cima C04 Exam Question No 28

Question No 28:

The minimum condition for a business to continue to operate in the short run is that?

A. Its revenue is sufficient to cover variable costs.
B. Its revenue is at least equal to its total costs.
C. Its marginal revenue is equal to its marginal cost.
D. It is making normal profits.

Answer: A

Cima C04 Exam Question No 27

Question No 27:

If, in the long run, a business doubles all the inputs it uses, but total physical output less than doubles, the business is experiencing:

A. Diminishing returns.
B. Decreasing returns to scale.
C. Price elasticity of demand of less than 1
D. Market saturation

Answer: B

Cima C04 Exam Question No 26

Question no 26:

Which of the following are reasons why future income is usually valued less than current income?
(i) Inflation may reduce the value of future income
(ii) Future income flows are riskier than current flows
(iii) The lender must delay the pleasure from the consumption that the money could buy now
(iv) Higher interest rates

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

Answer: D