Firms’ costs, revenue and objectives
3.6What the syllabus asks of you
- Definitions of costs of production: total cost (TC), average total cost (ATC), fixed cost (FC), average fixed cost (AFC), variable cost (VC), average variable cost (AVC)
- Calculation of costs of production: calculation of TC, ATC, FC, AFC, VC and AVC
- Calculation of costs of production: drawing and interpretation of diagrams that show how changes in output affect costs of production
- Definition of revenue: definitions of total revenue (TR) and average revenue (AR)
- Calculation of revenue: calculation of TR and AR
- Calculation of revenue: the influence of sales on revenue
- Objectives of firms: survival, social welfare, profit maximisation and growth
Read the notes first
Chapter 3: Firms' costs, revenue and objectives
Drill this topic
Every question on Firms’ costs, revenue and objectives, untimed, marked as you go.
Make a worksheet
Choose the years and how many questions, then print it with the answers on separate pages.
63 questions
1May / June 2026 · Paper 11 · Q15Show mark scheme →
A$0.50
B$1.00
C$1.50
D$20.00
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2May / June 2026 · Paper 12 · Q15Show mark scheme →
A10
B20
C30
D40
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3Oct / Nov 2025 · Paper 12 · Q15Show mark scheme →
A$3
B$24
C$27
D$30
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4Oct / Nov 2025 · Paper 13 · Q15Show mark scheme →
A5
B10
C15
D20
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5May / June 2025 · Paper 11 · Q16Show mark scheme →
AAt output X, average variable costs are lower than average fixed costs.
BAt output Y, total variable costs are greater than total fixed costs.
CBetween outputs W and Z, total fixed costs are falling.
DBetween outputs W and Y, average variable costs have not changed.
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6May / June 2025 · Paper 12 · Q13Show mark scheme →
Acosts that are divided by the amount produced
Bcosts that are present when output is zero
Ccosts that change according to the level of output
Dcosts that decrease when output increases
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7May / June 2025 · Paper 12 · Q14Show mark scheme →
Aoutput 6, fixed costs $100, variable costs $140
Boutput 9, fixed costs $30, variable costs $150
Coutput 12, fixed costs $200, variable costs $160
Doutput 15, fixed costs $120, variable costs $330
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8May / June 2025 · Paper 12 · Q15Show mark scheme →
Aits average cost and profit
Bits average cost and total revenue
Cits average revenue and profit
Dits average revenue and total revenue
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9Oct / Nov 2024 · Paper 12 · Q15Show mark scheme →
Atotal revenue ($) 20; price ($) 20
Btotal revenue ($) 1 000; price ($) 50
Ctotal revenue ($) 20 000; price ($) 20
Dtotal revenue ($) 20 000; price ($) 50
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10Oct / Nov 2024 · Paper 13 · Q15Show mark scheme →
Aprice divided by the total output
Btotal output divided by the price
Ctotal output multiplied by the price
Dtotal output multiplied by total costs
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11May / June 2024 · Paper 11 · Q13Show mark scheme →
AIt falls continuously.
BIt falls then rises.
CIt rises continuously.
DIt rises then falls.
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12May / June 2024 · Paper 11 · Q14Show mark scheme →
A$200
B$800
C$1000
D$2000
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13May / June 2024 · Paper 12 · Q13Show mark scheme →
Athe cost of raw materials
Bthe interest payment on existing loans
Cthe rent on the factory
Dthe insurance on the factory buildings
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14May / June 2024 · Paper 12 · Q14Show mark scheme →
AThe firm's highest total revenue occurs at 2 units of output sold.
BThe firm's highest total revenue occurs at 14 units of output sold.
CThe firm's prices are always greater than total revenue.
DThe firm's total revenue always increases as output rises.
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15Oct / Nov 2023 · Paper 12 · Q16Show mark scheme →
A$4.33
B$6
C$8.33
D$21
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16May / June 2023 · Paper 11 · Q15Show mark scheme →
A$4
B$5
C$40
D$50
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17May / June 2023 · Paper 12 · Q14Show mark scheme →
Acost of fuel
Bcost of raw materials
Cextra pay for working additional hours
Drent of offices
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18May / June 2023 · Paper 12 · Q15Show mark scheme →
Amoney received from sales
Bsales volume
Csurplus over costs
Dtax payments
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19May / June 2022 · Paper 11 · Q7Show mark scheme →
APQ
BPS
CQR
DQS
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20May / June 2022 · Paper 12 · Q9Show mark scheme →
APQ
BPS
CQR
DQS
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21May / June 2022 · Paper 12 · Q13Show mark scheme →
Agrowth
Befficiency
Cprofit maximisation
Dsocial welfare
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22Oct / Nov 2021 · Paper 12 · Q13Show mark scheme →
AIt has no fixed costs.
BIt has no variable costs.
CIts average fixed cost increases.
DIts average variable cost is constant.
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23Oct / Nov 2021 · Paper 13 · Q12Show mark scheme →
A$1000
B$2000
C$3000
D$4000
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24Oct / Nov 2021 · Paper 13 · Q13Show mark scheme →
AW TC, X TFC, Y TVC
BW TC, X TVC, Y TFC
CW TFC, X TC, Y TVC
DW TVC, X TC, Y TFC
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25May / June 2021 · Paper 11 · Q7Show mark scheme →
A$800
B$900
C$1000
D$1100
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26May / June 2021 · Paper 11 · Q14Show mark scheme →
Amultiply the quantity sold by the cost per bottle
Bmultiply the quantity sold by the price per bottle
Cmultiply the quantity sold by the profit per bottle
Dmultiply the quantity sold by the tax per bottle
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27May / June 2021 · Paper 12 · Q12Show mark scheme →
Aaverage fixed cost
Baverage total cost
Caverage variable cost
Dtotal variable cost
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28May / June 2021 · Paper 12 · Q14Show mark scheme →
Aaverage revenue
Bprofit
Ctotal cost
Dtotal revenue
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29Oct / Nov 2020 · Paper 12 · Q12Show mark scheme →
A$5
B$6
C$55
D$60
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30Oct / Nov 2020 · Paper 12 · Q13Show mark scheme →
A$650
B$1000
C$1650
D$2000
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31Oct / Nov 2020 · Paper 13 · Q12Show mark scheme →
A0
B1
C2
D3
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32Oct / Nov 2020 · Paper 13 · Q13Show mark scheme →
A$650
B$1000
C$1650
D$2000
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33May / June 2020 · Paper 11 · Q12Show mark scheme →
Aoutput 100; total fixed cost 1200; total variable cost 1200
Boutput 200; total fixed cost 1200; total variable cost 2000
Coutput 300; total fixed cost 1200; total variable cost 2700
Doutput 400; total fixed cost 1200; total variable cost 3600
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34May / June 2020 · Paper 11 · Q13Show mark scheme →
Atotal output 100; total cost 1000; total revenue 1300
Btotal output 200; total cost 1800; total revenue 2200
Ctotal output 300; total cost 2700; total revenue 3000
Dtotal output 400; total cost 3200; total revenue 3400
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35May / June 2020 · Paper 12 · Q12Show mark scheme →
AAverage fixed cost falls.
BAverage fixed cost rises.
CAverage variable cost remains constant.
DAverage variable cost rises.
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36May / June 2020 · Paper 12 · Q13Show mark scheme →
A100
B200
C300
D400
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37Oct / Nov 2019 · Paper 12 · Q15Show mark scheme →
AIt falls continuously.
BIt falls then rises.
CIt rises continuously.
DIt rises then falls.
Mark scheme
38Oct / Nov 2019 · Paper 13 · Q15Show mark scheme →
AIt falls continuously.
BIt falls then rises.
CIt rises continuously.
DIt rises then falls.
Mark scheme
39May / June 2019 · Paper 11 · Q14Show mark scheme →
AWX
BWY
CXY
DXZ
Mark scheme
40May / June 2019 · Paper 11 · Q15Show mark scheme →
A$100 000
B$150 000
C$220 000
D$370 000
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41May / June 2019 · Paper 12 · Q14Show mark scheme →
AWX
BWY
CXY
DXZ
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42May / June 2019 · Paper 12 · Q15Show mark scheme →
A$100 000
B$150 000
C$220 000
D$370 000
Mark scheme
43Oct / Nov 2018 · Paper 12 · Q14Show mark scheme →
A5
B10
C15
D20
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44Oct / Nov 2018 · Paper 12 · Q15Show mark scheme →
AIt falls as output increases.
BIt is calculated by adding total cost and total variable cost.
CIt is calculated by dividing total cost by output.
DIt must be paid even if output is zero.
Mark scheme
45Oct / Nov 2018 · Paper 13 · Q14Show mark scheme →
A5
B10
C15
D20
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46Oct / Nov 2018 · Paper 13 · Q15Show mark scheme →
AIt falls as output increases.
BIt is calculated by adding total cost and total variable cost.
CIt is calculated by dividing total cost by output.
DIt must be paid even if output is zero.
Mark scheme
47May / June 2018 · Paper 11 · Q14Show mark scheme →
AAverage cost is lowest when 10 units are produced.
BThe firm does not make any profit when 20 units are sold.
CThe firm has no fixed costs.
DTotal variable costs fall continuously over these outputs.
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48May / June 2018 · Paper 11 · Q15Show mark scheme →
AThey exist only in the long run.
BThey include raw material and direct labour costs.
CThey increase at the same rate as output.
DThey must be paid even if there is no output.
Mark scheme
49May / June 2018 · Paper 12 · Q14Show mark scheme →
AAverage cost is lowest when 10 units are produced.
BThe firm does not make any profit when 20 units are sold.
CThe firm has no fixed costs.
DTotal variable costs fall continuously over these outputs.
Mark scheme
50May / June 2018 · Paper 12 · Q15Show mark scheme →
AThey exist only in the long run.
BThey include raw material and direct labour costs.
CThey increase at the same rate as output.
DThey must be paid even if there is no output.
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51Oct / Nov 2017 · Paper 12 · Q14Show mark scheme →
Aincreased advertising costs that greatly improved sales
Blow prices that made the company's product competitive
Cnew technology that reduced costs
Dreduced sales and low prices
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52Oct / Nov 2017 · Paper 12 · Q15Show mark scheme →
A10
B11
C12
D13
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53Oct / Nov 2017 · Paper 13 · Q14Show mark scheme →
Aincreased advertising costs that greatly improved sales
Blow prices that made the company's product competitive
Cnew technology that reduced costs
Dreduced sales and low prices
Mark scheme
54Oct / Nov 2017 · Paper 13 · Q15Show mark scheme →
A$40 000
B$70 000
C$80 000
D$100 000
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55May / June 2017 · Paper 11 · Q13Show mark scheme →
Aa new bus
Bdiesel fuel
Cloan repayment
Drent
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56May / June 2017 · Paper 12 · Q13Show mark scheme →
Aaverage fixed costs
Baverage variable costs
Copportunity costs
Drepayment costs of borrowing
Mark scheme
57May / June 2017 · Paper 12 · Q15Show mark scheme →
A$10
B$15
C$70
D$85
Mark scheme
58Oct / Nov 2016 · Paper 12 · Q12Show mark scheme →
Acustomers
Bemployees
Cowners
Dpublic
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59Oct / Nov 2016 · Paper 12 · Q14Show mark scheme →
Ait falls continuously
Bit is highest at output 4 units
Cit is lowest at output 4 units
Dit rises continuously
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60Oct / Nov 2016 · Paper 13 · Q12Show mark scheme →
Acustomers.
Bemployees.
Cowners.
Dpublic.
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61Oct / Nov 2016 · Paper 13 · Q15Show mark scheme →
AIt falls continuously.
BIt is highest at output 4 units.
CIt is lowest at output 3 units.
DIt rises continuously.
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62May / June 2016 · Paper 11 · Q12Show mark scheme →
Aby maximising the difference between its total revenue and total cost
Bby maximising the number of goods that it sells
Cby minimising the number of goods that it keeps in stock
Dby minimising the difference between average revenue and average cost
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63May / June 2016 · Paper 12 · Q12Show mark scheme →
Aby maximising the difference between its total revenue and total cost
Bby maximising the number of goods that it sells
Cby minimising the number of goods that it keeps in stock
Dby minimising the difference between average revenue and average cost
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