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WorksheetsIGCSE Economics - 3.7 Firm's Costs and Revenues
Total questions: 79
Worksheet time: 1hrs 21mins
Which of the following is a disadvantage of small firms?
economies of scale
lack of finance
too bureaucratic
poor worker motivation
Which of the following is not an advantage of a large firm?
market domination
economies of scale
better communication
can undertake large scale contracts
Which of the following is an advantage of a small firms?
can benefit from economies of scale
ability to offer a personal service
can access a greater range of finance options
can attract the most qualified and experience staff
Which of the following factors encourage firms to grow?
poor access to sources of finance
desire to spread risk
government regulation monitoring levels of competition in a market
global economic instability
Economies of scale are those that
Result from changes in production techniques
Increase due to the growth of the industry as a whole
Generate lower average costs for the business
Reduce production costs in the short run
One business merges with or takes over another business in the same industry but at a different stage of production.
Horizontal integration
Conglomerate
Vertical integration
Scarcity
When one business mergers with or takes over a business in a completely different industry.
Internal growth
Horizontal integration
Vertical backwards integration
Conglomerate integration
The wage of labour in a firm increases.
What is the most likely effect on the production process?
Capital replaces labour immediately
Capital replaces labour in the long run.
Labour replaces capital immediately.
Labour replaces capital in the long run.
What is most likely to lead to an improvement in labour productivity in an industry?
an increase in capital investment
an increase in income tax rates
an increase in the demand for the industry’s product
an increase in the number of firms in the industry
A firm produces 1000 units and has a total cost of $50 000.
The variable cost per unit produced is $40.
What is the total fixed cost of the firm?
$1000
$4000
$10000
$40000
Firms can grow by increasing the internal scale of their operations.
What might be a disadvantage of this to the firm?
average cost begins to fall
it is difficult to motivate workers
labour is replaced by robots
markets become global
A government owns and runs an airline.
Which combination of ownership and sector is this?
A
B
C
D
Which sector of the economy contains firms that provide services to the general public and other firms?
Primary
Secondary
Tertiary
Public
Which is not a method used to measure the size of firms?
Cost of production
Sales revenue
Market share
The number of employees
A toy manufacturer merges with a chemical company. What type of merger is this?
Conglomatete
Horizontal
Vertical merger backwards
Vertical merger forwards
Which is not an advantage of small firms?
Greater degree of control
Quicker decision making
Opportunities to gain economies of scale
Easier to set up.
Fill in the blank. Economies of scale is when as output _________, unit costs ________ in the long run.
increases; decrease
increases; increase
decreases; increase
decreases; decrease
Large firms can buy raw materials in bulk at more favourable rates. This is an example of
Purchasing economies of scale
Technical economies of scale
Managerial economies of scale
Marketing economies of scale
Risk bearing economies of scale
Fill in the blank. __________ economies of scale occur due to an increase in the scale of production within a single firm
Internal
External
Complex
Simple
Which is not a factor of production?
Land
Labour
Money
Enterprise
Which economic term is used to measure how well resources are used in the production process?
Economies of scale
innovation
Productivity
Competitiveness
Twenty-five workers produce a total output of 300. What is the average product per worker?
7500
300
12
25
Which of the following statement defined 'production'?
the total output of goods and services in the production process
the measure of efficiency found by calculating the amount of output per unit of factor input.
the use of capital is more prominent than any other factor of production
the use of labour is more prominent than any other factor of production
Which of the following statement defined 'productivity'?
the total output of goods and services in the production process
the measure of efficiency found by calculating the amount of output per unit of factor input.
the use of capital is more prominent than any other factor of production
the use of labour is more prominent than any other factor of production
Which of the following statement is the reason for using labour-intensive production?
to use mass production techniques
machinery is more accurate than human
enable to provide customized and personalize services
capable to set automation in production
The price at which goods or services are offered by a business to their customers is called
Selling price
Cost
Variable cost
Currency
Costs that must be paid regardless of how much of a good or service is produced. They do not change in the short term, regardless of output are called
Variable costs
Fixed costs
Total costs
The costs
Fixed Cost + Variable Cost =
Breakeven point
Total costs
Fixed costs
Variable costs
The stage at which sales revenue equals the total cost of producing a good or service and the business is making neither a profit nor a loss is the
Taking a break
Breaking point
Point of sale
Breakeven point
A negative difference between the revenues taken in by a business and the costs of operating a business (when a business spends more than it makes) :(
Profit
Breakeven
Loss
Closed
Costs that change based on the amount of goods and services produced.
Total costs
Fixed costs
Variable costs
Costs
A positive difference between the revenues taken in by a business and the costs of operating a business (when a business makes more than it spends). :D
Loss
Profit
Breakeven
Sales
Rent, administrative costs, advertising, employee salary are examples of ...
Variable costs
Fixed costs
Costs
Prices
Raw materials, packaging, wages/labour costs are examples of
Total costs
Fixed costs
Variable costs
Benefits
A single item or good
Unit
Revenue
Cost
Price
The income (amount of money) a business receives for in exchange for a product or service
Costs
Profit
Loss
Sales revenue
Which two of the following are variable costs
Raw materials
Rent
Insurance
Water
Salary
What is a cost?
Something the company receives
The price of a product
Something the company must pay
Something the company sells
Which 3 of these are costs?
Fixed
Variable
Operating
Revenue
What is an operating cost?
Something a business pays before the company starts
Something the company receives
Something the company pays for their day to day running
Something the company cant afford
Which cost is Fixed?
Sandwiches
Ingredients
Utilities
Stock
What is a variable cost?
A cost which does not change
A cost which they must pay even if they produce nothing
A cost which changes the more or less the business produces
A cost the business pays when they start
If Sam's Sandwiches use 25p of material for each sandwich, what will be their variable costs for 10 sandwiches
10 x 0.25 = £2.50
2.5 x 10 = £25
25 x 10 = £250
0.25/10 = 2.5p
If fixed costs are £300 and Variable costs for making one sandwich are 50p, how would you work out total costs for 200 sandwiches?
200 x 300 x 0.50 = Total Sales
300 + 0.5 X 200 = Total Sales
200 + 0.5 x 300 = Total Sales
300 x 50 + 200 = Total Sales
What is the formula for Revenue?
Total Sales + Costs = Revenue
Number of Sales x Price per unit = Revenue
Price per unit x Total Costs = Revenue
Number of Sales - Total Costs = Revenue
If Wendy sells 50 hot dogs at £2 each. What is her revenue?
£250
£100
£120
£52
If Saleem makes £250 from selling fresh juice, £80 from selling ice creams, £95 from selling lollies and pays £30 to his assistant, what is his total revenue?
£395
£425
£455
£250
Average cost is
Total cost
Cost per unit
always zero
Total revenue -total cost=
average cost
Profit
Marginal cost
Total cost is a sum of Fixed cost and
fixed revenue
variable cost
average cost
Cost which do not change with the level of output is
marginal cost
variable cost
fixed cost
Cost of raw materials is an e.g of
fixed cost
variable cost
none
Which of the following costs are considered FIXED for an enterprise?
Rent
Material Costs
Hourly Paid Wages
Shipping / Delivery Costs
When calculating the total costs of a business, which TWO costs would you add together?
Fixed and Variable Costs
Start-up and Fixed Costs
Variable and Indirect Costs
Insurance Costs and Rent
Which of the following costs are considered variable?
Workers Salaries
Material Costs
Insurance Costs
Deposit On Premises
If Variable Costs Per Unit Are £12 Per Unit, Then The Total Variable Cost For Producing 1000 Products Will Be?
£120000
£6000
£12000
£1000
The Best Definition Of Fixed Costs Are Costs Which Do Not Change With
Time
Seasons
Output
Number Of Workers
Which Of The Following Is Not A Method Of Increasing Revenue
Increasing Price
Increasing Number Of Goods Sold
Increasing How Often Customers Purchase
Paying Workers Less
_____ refers to the cost per unit of output. It is calculated by using the formula: ____ = TC / Q, where TC is total cost and Q is quantity
Set-up cost
Direct cost
Average cost
Total cost
___ refers to the amount that a product is sold for.
Revenue
Price
Cost
Total revenue
___ is the money a business collects from the sale of its goods and services. It is calculated by multiplying the unit price by the quantity sold.
Running costs
Revenue
Prices
Dividends
A firm produces 1000 units and has a total cost of $50 000. The variable cost per unit produced is $40.
What is the total fixed cost of the firm?
$1000
$4000
$10 000
$40 000
What must result from an increase in output?
a decrease in the average cost
a decrease in the total costs
an increase in the fixed costs
an increase in the variable costs
An entrepreneur buys a workshop for $200 000 to make plastic boxes. In the first year of operation he spends $70 000 on materials, employs ten production workers paid by the amount produced (piece rate) at a total cost of $80 000 and buys two delivery vehicles for $10 000 each.
What are his total variable costs?
A $100 000
$150 000
$220 000
$370 000
Which statement about total fixed cost is correct?
It falls as output increases.
It is calculated by adding total cost and total variable cost
It is calculated by dividing total cost by output.
It must be paid even if output is zero.
Which is an internal diseconomy of scale?
a lack of communication in a firm
a reduction of cost by buying in bulk
a shortage of skilled labour in an area
traffic congestion in a particular area
