(a)[5]
Use the information to explain the ways in which macroeconomic changes can be connected to microeconomic decisions.
(b)[5]
Analyse, with the aid of a diagram showing costs and revenue for a monopoly, what is likely to happen to the firm’s profits when demand in the industry falls because of a recession.
(c)[4]
Suggest, using the idea of income elasticity of demand, why the fall in profits was less severe in the food industry than in the leisure industry during the recession.
(d)[6]
Do you support the view in the information that a recession is likely to be worse for firms with a high proportion of fixed costs than for firms with a higher proportion of variable costs?