Firms' costs, revenue and objectives

During 2009, Gulf Airlines, which was operating at a loss, said that it planned to cut the number of new aircraft it had ordered. If it did so, which of its costs would be affected directly?

May/June 2015

The diagram illustrates a firm's costs. What is the firm's total variable cost when output is $100$ units?

May/June 2015

During 2013, Barclays Bank operated two branches in one city. It chose to shut both branches, relocate to another building and hire fewer staff paid by the hour. What is likely to have happened to the bank’s fixed and variable costs?

May/June 2015

The diagram illustrates a firm’s costs. What is the firm’s total variable cost when output is 100 units?

May/June 2015

In what way can a firm ensure that it earns the highest possible profit?

May/June 2016

In what way can a firm make sure that it earns the highest possible profit?

May/June 2016

Which cost would a bus company classify as variable?

May/June 2017

Which costs are bound to decrease steadily as output rises?

May/June 2017

The table displays the costs of a firm. What is the amount of the firm’s fixed costs?

May/June 2017

An industry is facing diseconomies of scale. What change is taking place in long run average cost and total cost?

May/June 2018

A company that sells its product at $\$6$ per unit has the following total costs. Which statement is correct?

May/June 2018

Which of the statements about fixed costs is correct?

May/June 2018

State one possible cause of diseconomies of scale.

May/June 2018

A business that charges $\$6$ for each unit of its product has these total costs. output level (units): $0,\;10,\;20,\;30$ overall costs ($\$$): $40,\;100,\;120,\;150$ Which statement is correct?

May/June 2018

Which of the following statements about fixed costs is correct?

May/June 2018

The diagram illustrates the fixed costs, variable costs and total costs of a firm. Which distance corresponds to the firm’s fixed costs?

May/June 2019

An entrepreneur purchases a workshop for $\$200\,000$ in order to produce plastic boxes. During the first year of trading, he spends $\$70\,000$ on materials, hires ten production workers who are paid according to output (piece rate) at a total cost of $\$80\,000$, and acquires two delivery vehicles costing $\$10\,000$ each. What are his total variable costs?

May/June 2019

What does the term diseconomies of scale mean?

May/June 2019

The diagram illustrates a firm’s fixed costs, variable costs and total costs. Which distance shows the firm’s fixed costs?

May/June 2019

A businessman purchases a workshop for $200000 in order to produce plastic boxes. During its first year of trading, he spends $70000 on materials, hires ten production workers who are paid according to output (piece rate) at a total cost of $80000, and buys two delivery vehicles for $10000 each. What is the total of his variable costs?

May/June 2019

A cobalt-mining company puts money into machinery so that some workers can be replaced. Over time, diseconomies of scale develop. What might bring about this situation?

May/June 2021

Dimitry runs a business that makes and sells bottles of lemonade. He sells only one bottle size. How would Dimitry work out the firm’s total revenue?

May/June 2021

A tailor sells suits to four customers. The table gives the annual demand for the suits she produces. At which price should the suits be sold to achieve the tailor’s highest yearly revenue?

May/June 2021

Which cost of production decreases continuously when output rises?

May/June 2021

What does multiplying price by the quantity demanded of a product give?

May/June 2021

A producer of medical supplies gains from better road connections to its principal markets. Which benefit is guaranteed to occur as a result?

May/June 2022

The diagram illustrates the fixed costs, variable costs and total costs of a firm at output $S$. Which distance indicates the firm’s variable costs?

May/June 2022

A bank keeps some branches open even though they make losses. Which objective is the bank seeking to achieve?

May/June 2022

The diagram illustrates a firm’s fixed costs, variable costs and total costs when output is $S$. Which line segment indicates the firm’s variable costs?

May/June 2022

In 2019, Nicaragua saw GDP fall by 4%, even though household spending increased. Bananas were one Nicaraguan product whose supply rose; bananas are a merit good. The Nicaraguan government urged banana growers and its other producers to raise output. When output rises, a firm’s average production costs can change.

May/June 2022

The diagram illustrates a firm’s total cost (TC) curve. What is the average variable cost when the firm makes $10$ units of output?

May/June 2023

Which of the following is not a variable cost of production?

May/June 2023

What is meant by a firm’s revenue?

May/June 2023

What might lead to internal diseconomies of scale for a firm?

May/June 2023

A firm has fixed costs of $20 and the total variable costs shown below. How does average total cost change across this output range?

May/June 2024

The table sets out the firm's costs and output. What is the firm's average fixed cost?

May/June 2024

What does variable cost mean for a firm?

May/June 2024

The table presents the daily mean revenue and the number of units sold for a bicycle manufacturer across a five-day period. What conclusion can be drawn from the table?

May/June 2024

The diagram illustrates a firm’s average total costs (ATC) and average fixed costs (AFC). Which statement is correct?

May/June 2025

The diagram illustrates the average total cost curve (ATC) for a firm following a merger. Why is the shift from X to Y likely to be caused by this merger?

May/June 2025

What do fixed costs mean?

May/June 2025

The table sets out the daily output and costs for four firms that produce chairs. Which firm has the greatest average cost of production?

May/June 2025

Only the price charged for a firm’s product and the amount sold are known. What additional conclusion can be drawn from this?

May/June 2025

What must be decreasing if a firm is experiencing economies of scale?

Oct/Nov 2015

The table presents the information that managers of a company obtained from one week of business activity. Assuming there are no other costs, what is the value of the fixed costs?

Oct/Nov 2015

The table presents the data that managers of a company obtained from one week of business activity. If there are no additional costs, what is the value of the fixed costs?

Oct/Nov 2015

In China, demand for luxury goods, such as costly perfume, rose sharply from 2007 to 2012. The mean revenue earned from selling these goods also increased. Many luxury goods have elastic demand. At present, a high share of the luxury goods sold in China is imported. Some firms are now thinking about making products in China instead of exporting to China.

Oct/Nov 2015

A survey of managers in the USA found that most businessmen believe a company’s duty is ‘to serve the interests of owners, employees, customers and the public’. By contrast, the concept of profit maximisation suggests that a company’s chief responsibility should be to the

Oct/Nov 2016

A firm has fixed costs of $200$ for its daily output. The table shows the firm’s daily total variable costs. What can be concluded about the firm’s average total cost?

Oct/Nov 2016

Which of the following is an internal diseconomy of scale?

Oct/Nov 2017

A large computer company announced that its profits had dropped below the forecast level. What could have led to this?

Oct/Nov 2017

The table gives a firm’s variable costs. It can sell each unit for $\\$5$. Its fixed costs are $\\$10$. How many units should the firm make in order to maximise profits?

Oct/Nov 2017

Which of the following is an internal diseconomy of scale?

Oct/Nov 2017

A large computer company reported that its profits had fallen to a level lower than expected. What could have led to this?

Oct/Nov 2017

An entrepreneur purchases a workshop for $\$10000$ to produce picture frames. In the first year, he spent $\$40000$ on materials and hired two workers. He paid the workers for each frame made, with the total cost coming to $\$30000$. He also bought a vehicle for $\$10000$ to deliver the frames. Calculate his total variable costs.

Oct/Nov 2017

Singapore is often placed among the top countries in which to do business. It has an open economy based on free trade. It has a record of strong entrepreneurship, low unemployment, low average costs and relatively low tax rates. Its example may prompt other countries to remove trade barriers.

Oct/Nov 2017

The table displays a firm’s average revenue and average cost at various output levels. If every unit produced is sold, at which output level is profit at its highest?

Oct/Nov 2018

Which statement regarding total fixed cost is correct?

Oct/Nov 2018

The table presents a firm’s average revenue and average cost at various output levels. If all output is sold, which output level produces the highest profit?

Oct/Nov 2018

Which statement regarding total fixed cost is correct?

Oct/Nov 2018

A United Arab Emirates (UAE) airport reported record profit of $\$1.9$ billion in $2016$, even though its total revenue fell. In $2016$, the UAE was considering the introduction of Value Added Tax (VAT). Bringing in an indirect tax could affect unemployment. The UAE has an extremely low unemployment rate, which is one of the reasons multinational companies (MNCs) choose to locate there.

Oct/Nov 2018

A business making bicycles has these costs at different output levels. Output 10: total fixed costs $300$, total variable costs $800$. Output 20: total fixed costs $300$, total variable costs $1500$. Output 30: total fixed costs $300$, total variable costs $3300$. What happens to the average total cost over this range of output?

Oct/Nov 2019

A firm that makes bicycles has the following costs at various output levels. How does the average total cost change across this output range?

Oct/Nov 2019

A greater proportion of agricultural markets are nearer to perfect competition than are markets for manufactured goods and services. Business organisations do not always pursue the same objectives, and these objectives can also differ between markets. In $2017$, the Nigerian government applied supply-side policy measures to shape firms’ goals and performance in a variety of markets, while also bringing down firms’ average production costs.

Oct/Nov 2019

The table presents the output and total costs of a small firm. What is the average fixed cost when 10000 units are produced?

Oct/Nov 2020

A firm has fixed costs of $1000. The table gives the variable cost at different levels of output. If the goods are sold for $500 each, what profit will be earned from the sale of 4 units?

Oct/Nov 2020

The table gives firm X’s total cost at each output level. At what level of output does total variable cost become greater than total fixed cost?

Oct/Nov 2020

A firm has fixed costs of $1000. The table gives the variable cost at different output levels. If the goods are sold for $500 each, what profit will be earned from selling 4 units?

Oct/Nov 2020

The diagram illustrates a subsidy being applied to a product supplied by a firm. Which area shows the firm’s total revenue, including the subsidy?

Oct/Nov 2021

The diagram illustrates the total cost curve for a firm. What conclusion can be drawn about the firm?

Oct/Nov 2021

The table gives a firm’s average total cost at different output levels. What occurs after 4 units have been produced?

Oct/Nov 2021

A company imports $20$ high quality bicycles into the US, paying $\$3000$ for each bicycle. It sells all of them and makes a profit of $\$1000$ on every bicycle. What is the firm’s average revenue?

Oct/Nov 2021

The diagram illustrates total cost (TC), total fixed cost (TFC) and total variable cost (TVC). Which costs are represented by W, X and Y?

Oct/Nov 2021

The table gives the output and total cost for a firm using four production methods, A-D. Which method results in diseconomies of scale when the firm increases production from $1000$ to $3000$ units?

Oct/Nov 2021

Why would one oil-drilling company making a profit want to acquire another oil-drilling company that is also making a profit?

Oct/Nov 2022

An airline acquires an online clothing company. What is one advantage of this move for the airline?

Oct/Nov 2023

A company makes five units of output at an average cost of $20 per unit. The cost of producing the sixth unit is $26. What is the average cost of six units?

Oct/Nov 2023

The diagram illustrates a firm’s long-run average total cost (ATC). What could bring about the movement from ATC$_1$ to ATC$_2$?

Oct/Nov 2024

A company’s average revenue equals $20. It sells 1000 units. What are the company’s total revenue and the product price?

Oct/Nov 2024

What method is used to calculate total revenue?

Oct/Nov 2024

The table gives the quantities of tomatoes demanded and supplied at various prices. The starting equilibrium occurs at a price of $40. In the next year, improved harvesting technology causes supply to rise by 50% at each price. What will happen to the suppliers’ total revenue?

Oct/Nov 2024

At an output level of 100 units, a firm's total variable cost is $300$ and its total fixed cost is $2700$. What is the average total cost?

Oct/Nov 2025

The table displays a firm’s average revenue and average cost at different output levels. If every unit produced is sold, which level of output yields the greatest profit?

Oct/Nov 2025

In April 2023, a cosmetics company in France merged with one based in Australia. The merger is expected to reduce average total costs because the enlarged firm is likely to gain from larger internal economies of scale. A manager said that an important objective is to make production more sustainable by using raw materials drawn from renewable sources. In most countries, the firm’s cosmetics, including perfume, are taxed at a higher rate than food.

Oct/Nov 2025