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Edexcel IGCSE Economics 1.2.3 Business Costs Revenues and Profit Questions

Use this costs-and-scale set to calculate revenue, cost and profit, then interpret economies or diseconomies using diagrams and data.

Syllabus
First assessment 2019
Course
Economics 4EC1

Exam points

  • Calculate total revenue, average cost, profit or loss from price, output and cost data.
  • Label economies, diseconomies and the efficient point on an average cost diagram.
  • Evaluate scale effects using falling average costs, bureaucracy and firm growth contexts.

Covered syllabus points

1.2.3.a Revenue, cost and profit formulae1.2.3.b Internal and external economies of scale1.2.3.c Diseconomies of scale and the LRAC curve

Question 1

[Maximum number: 3]

Question (a)

(a)

A firm has total fixed costs of $40000 per month and variable costs of $ 150 per unit. If it produces 1,000 units, what are the total costs per month for the firm?

A

$ 190000

B

$ 150000

C

$ 41150

D

$ 40150

[ 1 ]

Question (b)

(b)

Figure 1 shows the costs of production per month for a firm making 2,000 units.

Figure 1

Figure 1

Calculate the average cost per unit for the firm when it makes 2,000 units. You are advised to show your working.

[ 2 ]

Question 2

[Maximum number: 2]

What is meant by the term economies of scale?

Question 3

[Maximum number: 1]

A product has an income elasticity of demand (YED) of -0.16 .

Which one of the following is a diseconomy of scale?

A

An increase in productivity

B

An increase in bureaucracy

C

A decrease in the cost of research and development

D

A decrease in government regulation

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