Economics 0455 · IGCSE · Firms’ costs, revenue and objectives
Firms’ costs, revenue and objectives — practice question
A United Arab Emirates (UAE) airport reported a record profit of $1.9 billion in 2016, even though its total revenue had fallen. In 2016, the UAE was considering the introduction of Value Added Tax (VAT). Bringing in an indirect tax could affect unemployment. The UAE has a very low unemployment rate, which is one reason multinational companies (MNCs) choose to establish themselves in the UAE.
(a)[2]
Define the meaning of total revenue.
(b)[4]
Explain how a firm may still make a profit even if revenue falls.
(c)[6]
Analyse how the introduction of an indirect tax could lead to unemployment.
(d)[8]
Discuss whether MNCs are likely to establish themselves in countries with low unemployment.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Quantity sold multiplied by the selling price” …