(a)[5]
Use the information to explain the links between macroeconomic changes and 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 there is a fall in demand in the industry due to a recession.
(c)[4]
Suggest, using the concept of income elasticity of demand, why the decline in profits was less severe during the recession in the food industry than in the leisure industry.
(d)[6]
Do you support the opinion in the information that a recession is likely to be worse for firms with a high proportion of fixed costs than firms with a higher proportion of variable costs?