GWC N5 Economics Costs, Revenue and Profit

The correct definition of a fixed cost: Fixed costs are costs that

• change depending on how many units a firm produces

• does not change regardless of how many units a firm produces

• tends to result in lower profits for a firm

• help a business make large profits

The correct definition of a variable cost: Variable costs are costs that

• change depending on how many units a firm produces

• does not change regardless of how many units a firm produces

• tends to result in lower profits for a firm

• help a business make large profits

Variable costs + fixed costs = TOTAL COST

• True

• False

An example of a fixed cost is ________, and an example of a variable cost would be ________.

Which of the following is true?

• Total cost (TC) = Fixed costs (FC) + variable costs (VC)

• Total cost (TC) = Fixed costs (FC) + variable costs (VC)

• Fixed costs (FC) - Variable costs (VC) = total costs

• None of these options are correct

Selling price per unit x output =

• total revenue

• total cost

• total profit

• total loss

When a firm produces 0 units, which of the following are true?

• variable costs are higher than fixed costs

• fixed costs are higher than variable costs

• fixed costs and variable are both £0

• fixed costs are equal to variable cost

Average fixed cost (AFC) is calculated as:

• total fixed cost / output

• total fixed cost / selling price

• total fixed cost / variable cost

• total fixed cost / profit

Average variable cost (AVC) is calculated as:

• total variable cost / output

• total variable cost / profit

• total variable cost / fixed cost

• total variable cost / selling price

Average Total Cost (ATC) is calculated as:

• Total cost / output

• Total cost / selling price

• Total cost / fixed cost

• Total cost / average cost