Edexcel A Level Economics A
Edexcel A Level Economics A 3.3 Revenues, Costs and Profits Exam Questions
Free Edexcel A Level Economics A exam questions on 3.3 Revenues, Costs and Profits, with mark schemes. Covers revenue, costs, economies of scale and normal and supernormal profit.
3.3 Revenues, Costs and Profits exam questions
1 question pack of real past exam questions with its mark scheme. Answer every question without notes, then mark your answers line by line against the mark scheme.
StemUp mark scheme flashcards
Edexcel A Level Economics A 9EC0 Flashcards (Anki & Quizlet)
Every answer is written in mark scheme wording, so you learn exactly what examiners give marks for. Use them on Anki or Quizlet, then test yourself with the questions on this page.
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About Edexcel A Level Economics A 3.3 Revenues, Costs and Profits
3.3 gives you the cost and revenue tools for market structure analysis. Questions mix calculations with diagrams of cost curves and economies of scale.
What you need to know
- Revenue Total, average and marginal revenue, and the link between PED and total revenue.
- Costs Fixed, variable, total, average and marginal costs in the short run, and the law of diminishing marginal productivity.
- Economies and diseconomies of scale Internal economies (technical, purchasing, managerial, financial, risk-bearing), external economies, and diseconomies of scale. The LRAC curve and minimum efficient scale.
- Normal and supernormal profit Normal profit is where TR = TC including opportunity cost. Know the short run and long run shutdown points: a firm shuts down in the short run if AR is below AVC.
Common mistakes in 3.3 Revenues, Costs and Profits
- Confusing diminishing returns (short run) with diseconomies of scale (long run).
- Drawing MC cutting AC anywhere other than at the minimum of AC.
- Saying normal profit is zero profit without explaining it covers opportunity cost.
- Using total cost instead of variable cost for the short run shutdown rule.
Try three 3.3 Revenues, Costs and Profits exam-style questions
1. A firm sells 200 units at 15 pounds each. Its total costs are 2,400 pounds. Calculate its profit. (2 marks)
Show the mark scheme answer
Total revenue = 200 x 15 = 3,000 pounds (1). Profit = 3,000 - 2,400 = 600 pounds (1).
2. Explain the difference between economies of scale and diminishing marginal returns. (4 marks)
Show the mark scheme answer
Diminishing returns is a short run concept (1) where adding variable factors to a fixed factor eventually reduces marginal output (1). Economies of scale are long run (1), where all factors vary and average costs fall as the scale of production rises (1).
3. State the short run shutdown condition. (1 mark)
Show the mark scheme answer
A firm should shut down in the short run if price (AR) is below average variable cost.
3.3 Revenues, Costs and Profits FAQs
What does Edexcel A Level Economics 3.3 cover?
Revenue, short and long run costs, economies and diseconomies of scale, and normal and supernormal profit, including shutdown points.
What is the minimum efficient scale?
The lowest level of output at which long run average cost is minimised.
Why does the MC curve cut AC at its minimum?
When marginal cost is below average cost it pulls the average down, and when it is above it pulls the average up, so they meet at the lowest point of AC.
Revise this topic with flashcards: Edexcel A Level Economics A 9EC0 Flashcards, with mark scheme answers for Anki and Quizlet.
