Specification point 3.3.4 · Theme 3
Revenues, costs and profits · Business behaviour and the labour market
Questions tagged to this specification point
18 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 online streaming services market
Using examples from Figure 2 or Extract B, discuss the likely impact of price discrimination on a firm’s profits. Use a relevant diagram to support your answer.
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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 travel and tourism industry
With reference to Extract C, discuss the proposed government subsidy to prevent Thomas Cook from reaching its shut-down point.
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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 · Energy and telecommunication markets in the UK
Discuss one likely reason for the rise in BT’s profit (Figure 2, Extracts B and C). Use a cost and revenue diagram to support your answer.
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Case study · Branded coffee shops
With reference to Figure 3 and other information provided, discuss the price and non-price strategies that Starbucks may use to increase profitability.
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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Case study · The UK economy
Discuss the likely impact of the National Living Wage on the profitability of firms. Use a cost and revenue diagram in 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.
Draw a cost and revenue diagram to illustrate the different business objectives: profit maximisation and revenue maximisation.
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Small local bakeries have many of the characteristics of monopolistic competition. Draw the short run profit maximising equilibrium of a loss-making luxury brownie baker.
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Calculate the change in total supernormal profit if Emily changes her objective from profit maximisation to revenue maximisation. You are advised to show your working.
Draw a cost and revenue diagram to show the likely impact of a reduction in sales of construction equipment on JCB’s profits.
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With reference to Figure 1, calculate the profit (in pence) for a cappuccino drink. You are advised to show your working.
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Quick checks of economic understanding
If Peloton changes its objective to sales maximisation, then without making a loss, it operates at an output where:
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