Economy

Correct answer: C

Members may coordinate output or prices.

Correct answer: A

I is incorrect: Human capital → Productive skills and capabilities embodied in people. Education and training can improve it. II is incorrect: Perfect competition → Many price-taking sellers offering a homogeneous product. An individual firm has negligible influence on market price.

Correct answer: D

It is the change in total cost divided by change in output.

Correct answer: B

I is incorrect: Economies of scale → Long-run average cost falls as scale expands. Specialisation and spreading some costs can lower unit cost. II is incorrect: Monopolistic competition → Many sellers with differentiated products. Brand or quality differences give limited pricing power.

Correct answer: C

I is correct: Marginal cost → Extra cost of one additional unit. It is the change in total cost divided by change in output. II is incorrect: Average cost → Total cost per unit of output. It equals total cost divided by quantity.

Correct answer: A

Buyer concentration is the defining feature.

Correct answer: A

I is incorrect: Monopsony → A market with one buyer. Buyer concentration is the defining feature. II is incorrect: Physical capital → Produced assets used in further production. Machinery is a typical example.

Correct answer: B

Materials used generally rise with output.

Correct answer: D

I is correct: Diminishing marginal returns → Extra output from a variable input eventually declines. The result assumes other inputs are fixed. II is incorrect: Variable cost → Changes with production volume. Materials used generally rise with output.

Correct answer: C

I is incorrect: Fixed cost → Does not vary with output in the relevant short run. Rent can remain payable even when production stops. II is incorrect: Entrepreneurship → Organising resources and bearing business uncertainty. Entrepreneurs coordinate production decisions.

Correct answer: A

It equals total cost divided by quantity.

Correct answer: B

I is correct: Marginal cost → Extra cost of one additional unit. It is the change in total cost divided by change in output. II is incorrect: Physical capital → Produced assets used in further production. Machinery is a typical example.

Correct answer: A

I is correct: Diseconomies of scale → Long-run average cost rises as scale expands. Coordination difficulties can raise unit cost. II is incorrect: Variable cost → Changes with production volume. Materials used generally rise with output.

Correct answer: D

I is correct: Subsidy → Government support lowering a recipient's cost or raising receipts. It can influence production or consumption incentives. II is correct: Fiscal consolidation → Measures to improve the government's fiscal balance. It concerns deficits and debt sustainability rather than only one tax.

Correct answer: A

I is incorrect: Proportional tax → Tax rate remains constant as the base rises. The amount paid rises but the proportion does not. II is correct: Automatic stabiliser → Fiscal mechanism responding without a new discretionary decision. Income-linked taxes can soften cyclical fluctuations.

Correct answer: C

Tax revenue is a standard example.

Correct answer: D

I is correct: Proportional tax → Tax rate remains constant as the base rises. The amount paid rises but the proportion does not. II is correct: Capital expenditure → Expenditure creating assets or reducing liabilities. Construction of a government asset is an example.

Correct answer: A

I is incorrect: Crowding out → Government borrowing reducing some private spending. It can occur through higher interest rates or resource competition. II is correct: Public debt → Outstanding government borrowing. It is a stock accumulated across periods.

Correct answer: C

A tax can have this incidence even with a uniform commodity rate.

Correct answer: C

I is incorrect: Proportional tax → Tax rate remains constant as the base rises. The amount paid rises but the proportion does not. II is correct: Subsidy → Government support lowering a recipient's cost or raising receipts. It can influence production or consumption incentives.

Correct answer: C

I is correct: Capital receipt → Government receipt that creates a liability or reduces an asset. Borrowing and sale of assets are examples. II is correct: Automatic stabiliser → Fiscal mechanism responding without a new discretionary decision. Income-linked taxes can soften cyclical fluctuations.

Correct answer: A

Current administrative spending is a common example.

Correct answer: B

I is correct: Public debt → Outstanding government borrowing. It is a stock accumulated across periods. II is correct: Fiscal consolidation → Measures to improve the government's fiscal balance. It concerns deficits and debt sustainability rather than only one tax.

Correct answer: A

It can occur through higher interest rates or resource competition.

Correct answer: C

I is correct: Progressive tax → Average tax burden rises with the tax base. Higher-income persons pay a larger income share under a progressive income tax. II is correct: Regressive burden → Lower-income persons pay a greater share of income. A tax can have this incidence even with a uniform commodity rate.