Specification point 3.3.2 · Theme 3
Revenues, costs and profits · Business behaviour and the labour market
Questions tagged to this specification point
14 questions
Long-form evaluation and discussion
Evaluate the microeconomic effects of rising energy bills on the hotel industry or an industry of your choice.
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Questions built around exam extracts
Case study · The UK economy
Discuss the likely impact of a rise in gas prices on a firm that uses a large amount of gas in its production process. Use a cost and revenue diagram to support your answer.
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Case study · UK branded coffee shop chains market
Using a cost and revenue diagram, discuss the likely impact of ‘rising costs’ for coffee shops on their profitability (Extract A, line 2).
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Case study · The German economy
Discuss the likely impact of investment in new technology on the profitability of firms in Germany, as described in Extract C line 20. Use a cost and revenue diagram to support your answer.
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Case study · The UK economy
Discuss factors that are causing many high street retailers in the UK to close some branches or shut down completely. Use a cost and revenue diagram to support your answer.
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Case study · Indonesia
Examine the likely effects on the profitability of Indonesian rice farmers of the government’s increased investment in dams (Extract E, lines 43-48). Use a cost and revenue diagram to support your answer.
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Focused calculations, explanations and diagrams
Calculate the change in total supernormal profit if the restaurant changes its objective from revenue maximisation to profit maximisation. You are advised to show your working.
Calculate the value of the government subsidy necessary for this production to cover all of its costs.
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Explain what happens to total cost at output levels greater than Z.
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For a luxury doughnut producer the average selling price is £2. The average variable cost is 40% of the selling price and its fixed cost per day is £300. Calculate total costs per day assuming it produces 400 doughnuts per day.
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Calculate, using the information provided, the total costs of GoCompare in 2016.
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Explain the difference between fixed costs and variable costs.
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Quick checks of economic understanding
At output levels greater than Z, which one of the following correctly identifies what will happen to the cost?
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Which one of the following is a fixed cost to Starbucks?
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