Y10 Economics - C22 Firm Costs, Revenue and Objectives

What are costs of production?

• Expenses in the production process

• Profits made by the firm

• Sales revenue generated

• Taxes paid to employees

Which of the following is an example of fixed costs?

• Salaries for managers

• Utility bills based on usage

• Raw materials

• Wages for hourly workers

What do variable costs depend on?

• The location of the business

• The type of product sold

• The number of employees

• The level of output

How is total cost calculated?

• Total revenue - Total profit

• Average cost x Output level

• Fixed costs + Variable costs

• Revenue - Expenses

What does average fixed cost (AFC) represent?

• Total variable costs divided by output level

• Fixed costs multiplied by output level

• Total costs divided by total revenue

• Total fixed costs divided by output level

What is average total cost (ATC)?

• Total cost of making one product

• Total variable costs only

• Total revenue from sales

• Total fixed costs only

What happens when a firm operates beyond its optimal scale?

• It suffers from diseconomies of scale

• It reduces its fixed costs

• It benefits from economies of scale

• It maximizes its profits

What is total revenue (TR)?

• The total money received from sales

• The total costs incurred by a firm

• The average price of goods sold

• The profit made after expenses

How is average revenue (AR) calculated?

• Total revenue divided by quantity sold

• Total costs divided by output level

• Total variable costs divided by quantity sold

• Total fixed costs divided by total revenue

Which of the following is NOT an objective of firms?

• Survival

• Social welfare

• Profit maximization

• Employee satisfaction