Which of the following is a fixed cost for a firm?
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B) The rent for the factory is a fixed cost because it does not change with the level of output. The best distractor is C because part-time workers' wages may vary with output.
If a firm produces 100 units and sells them for £5 each, what is the total revenue?
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B) £500 is the total revenue, calculated as 100 units times £5 each. The best distractor is A because it shows a misunderstanding of the calculation.
Which of the following is a variable cost for a firm?
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B) The cost of electricity is a variable cost because it changes with the level of output. The best distractor is A because machinery is a fixed cost.
A firm's total cost is £2000 and its total revenue is £3000. What is the firm's profit?
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A) £1000 is the firm's profit, calculated as total revenue minus total cost. The best distractor is B because it shows a misunderstanding of the profit calculation.
Which of the following is an example of a firm's objective?
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C) To maximise profit is a common objective of firms. The best distractor is B because minimising costs is a strategy, not an objective.
If a firm's average cost is £10 and it produces 50 units, what is the total cost?
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C) £500 is the total cost, calculated as average cost times the number of units. The best distractor is B because it shows a misunderstanding of the calculation.
Which of the following is a definition of total cost?
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B) The cost of all resources used in production is the definition of total cost. The best distractor is A because it defines average cost.
A firm sells 200 units at £10 each. What is the average revenue per unit?
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B) £20 is the average revenue per unit, calculated as total revenue divided by the number of units. The best distractor is A because it shows a misunderstanding of the calculation.
Which of the following is a definition of revenue?
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B) The total income from sales is the definition of revenue. The best distractor is A because it defines total cost.
A firm's fixed costs are £1000 and its variable costs are £5 per unit. If it produces 200 units, what is the total cost?
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D) £2005 is the total cost, calculated as fixed costs plus variable costs times the number of units. The best distractor is C because it shows a misunderstanding of the calculation.
Which of the following is an example of a firm's non-profit objective?
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C) To provide quality products is an example of a non-profit objective. The best distractor is D because maximising profit is a profit objective.
If a firm's total revenue is £4000 and its total cost is £3000, what is the firm's profit margin?
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A) 25% is the firm's profit margin, calculated as profit divided by total revenue. The best distractor is B because it shows a misunderstanding of the calculation.
Which of the following is a definition of average cost?
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A) The cost of producing one unit of output is the definition of average cost. The best distractor is B because it defines total cost.
A firm sells 150 units at £8 each. What is the total revenue?
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C) £1200 is the total revenue, calculated as the number of units times the price per unit. The best distractor is B because it shows a misunderstanding of the calculation.
Which of the following is an example of a firm's profit objective?
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C) To maximise profit is an example of a firm's profit objective. The best distractor is B because maximising sales is not necessarily a profit objective.