Economics 2281 · O Level · Firms' costs, revenue and objectives
Firms' costs, revenue and objectives — practice question
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.
(a)[2]
Define total revenue in terms of sales income.
(b)[4]
Explain how a firm can make a profit even though revenue falls.
(c)[6]
Analyse how introducing an indirect tax may 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: “Price per unit \times quantity sold” …