CAIE A-Level Economics 7.5.2 Short-run cost function

CAIE A-Level Economics 7.5.2 Short-run cost function
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise short-run cost analysis using fixed, variable, average and marginal cost data, tables and cost-curve diagrams.

How this is tested

  • calculate FC, VC, TC, AVC, AFC, ATC or MC from short-run cost tables
  • interpret when MC pulls AVC or ATC up or down on a cost-curve diagram
  • explain why average fixed cost falls as output rises in the short run

Question 5

[Maximum number: 1]

A firm has fixed costs of $ 300 and can produce two units per hour. Its total variable costs are $ 200 for one unit and $ 300 for two units.

Which cost will fall by the lowest amount when the second unit is produced?

A

average fixed cost

B

average total cost

C

average variable cost

D

marginal cost