Costs, Revenues and Profits

What Costs, Revenues and Profits covers

Costs, Revenues and Profits is A2 content, examined in both A2 Unit 3 and A2 Unit 4, which each cover all A level content. 127 recall questions across 8 subtopics.

The 8 subtopics

Each one has its own page.

• Costs, revenues and profits: Law of diminishing returnsRecall questions on The law of diminishing returns.Open →
• Costs, revenues and profits: Product, total and average costsAverage and marginal product, total cost as fixed plus variable cost, and the formulas and calculations for average total, fixed and variable cost.Open →
• Costs, revenues and profits: Total, average and marginal values for revenue and costsRecall questions on Total, average and marginal values for revenue and costs.Open →
• Costs, revenues and profits: Internal and external economies and diseconomies of scaleRecall questions on Internal and external economies and diseconomies of scale.Open →
• Costs, revenues and profits: Concept of profit maximisationRecall questions on The concept of profit maximisation, The difference between normal and abnormal profits.Open →
• The growth of firms: How and why firms might growRecall questions on How and why firms might grow.Open →
• The growth of firms: Types of integration/ mergersRecall questions on Types of integration/ mergers.Open →
• EfficiencyRecall questions on dynamic efficiency, Pareto efficiency, Pareto improvement and X-inefficiency.Open →

What you need to know

Answer each one before you reveal it.

Take Costs, Revenues and Profits further

The same content, four other ways.

Questions from this topic

Each one with the model answer underneath.

1. 1

   What is the law of diminishing returns?

   Model answer

   As additional units of a variable factor (e.g. labour) are added to a fixed factor (e.g. capital), the marginal product of the variable factor will eventually decline.

2. 2

   In the law of diminishing returns, what happens when a variable factor is added to a fixed factor?

   Model answer

   The marginal product of the variable factor will eventually decline as more units are added.

3. 3

   What may happen to marginal product initially before diminishing returns set in?

   Model answer

   Initially marginal product may rise or stay constant before eventually falling.

4. 4

   Does diminishing returns always set in immediately when adding more of a variable factor?

   Model answer

   No, there may be an initial phase where marginal product rises before it begins to fall.

5. 5

   Define fixed costs.

   Model answer

   Costs that do not vary with the level of output in the short run.

6. 6

   Define variable costs.

   Model answer

   Costs that change directly with the level of output.

What is inside Levo

Six ways to work the same material.

Costs, Revenues and Profits revision questions

What does Costs, Revenues and Profits cover in WJEC A-Level Economics?

8 subtopics: costs, revenues and profits: law of diminishing returns, costs, revenues and profits: product, total and average costs, costs, revenues and profits: total, average and marginal values for revenue and costs, costs, revenues and profits: internal and external economies and diseconomies of scale, costs, revenues and profits: concept of profit maximisation, the growth of firms: how and why firms might grow, the growth of firms: types of integration/ mergers and efficiency. Each one has its own page with questions and model answers.

How is Costs, Revenues and Profits organised?

By the WJEC 1520QS specification, subtopic by subtopic, so it matches the order you are taught it in.