Edexcel A Level Economics B
Edexcel A Level Economics B 1.6 Revenue, Costs, Profits and Cash Exam Questions
Free Edexcel A Level Economics B exam questions on 1.6 Revenue, Costs, Profits and Cash, with mark schemes. Covers revenue, costs, profit, break-even and cash flow.
1.6 Revenue, Costs, Profits and Cash 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
A Level Economics Flashcards
Every answer is written in mark scheme wording, so you learn exactly what examiners give marks for. Pick your exam board, then test yourself with the questions on this page.
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About Edexcel A Level Economics B 1.6 Revenue, Costs, Profits and Cash
1.6 brings business numeracy into economics. Questions often ask you to calculate revenue, costs or profit and explain why cash flow matters even for profitable firms.
What you need to know
- Revenue Total revenue = price x quantity, and average and marginal revenue.
- Costs Fixed, variable, total and average costs, and economies and diseconomies of scale.
- Profit Profit = total revenue minus total cost. Know normal and supernormal profit.
- Cash flow The difference between cash in and cash out. A profitable firm can still fail if it runs out of cash.
Common mistakes in 1.6 Revenue, Costs, Profits and Cash
- Confusing profit with cash.
- Treating rent as a variable cost.
- Forgetting to multiply price by quantity when calculating revenue.
Try three 1.6 Revenue, Costs, Profits and Cash exam-style questions
1. A firm sells 1,000 units at 8 pounds each. Fixed costs are 3,000 pounds and variable cost is 4 pounds per unit. Calculate profit. (3 marks)
Show the mark scheme answer
Revenue = 8,000 pounds (1). Total cost = 3,000 + 4,000 = 7,000 pounds (1). Profit = 1,000 pounds (1).
2. Explain why a profitable business might face cash flow problems. (2 marks)
Show the mark scheme answer
Customers may pay on credit, so cash arrives later than costs must be paid (1), meaning the firm cannot pay suppliers or wages on time despite making a profit (1).
3. Define a fixed cost. (1 mark)
Show the mark scheme answer
A cost that does not change with the level of output in the short run, such as rent.
1.6 Revenue, Costs, Profits and Cash FAQs
What does Edexcel A Level Economics B 1.6 cover?
Revenue, costs, profit, economies of scale and cash flow.
What is the difference between profit and cash flow?
Profit measures revenue minus costs over a period. Cash flow measures the timing of money moving in and out.
Do I need formulas?
Yes. Know total revenue, total cost, profit and average cost.
Revise this topic with flashcards: A Level Economics Flashcards, with mark scheme answers for Anki and Quizlet.
