gcse economics - business finance - past exam questions

Distinguish between fixed and variable costs and give examples (4)

Easibeds Ltd calculated its average costs as follows

Output (per week)	Average cost per bed (units) (£)
1	300
2	245
3	220
4	200
5	184

• What is the total cost of making 3 beds? (1)
• The total variable cost of making 3 beds is £400. What are the firms’ fixed costs? (2)
• The table shows that the average cost of producing each bed falls as more beds are produced. Explain why this is so. (6)
• The beds are sold at £220 each
a) At what level of output does Easibeds ltd break even? Show your working.
b) According to the information at what level of output does Easibeds ltd maximise its profits. Show your working. (3)

• As a manager you find out from some statistical evidence that the demand for beef was price elastic

• What does price elastic mean? (2)

• Why might a knowledge of price elasticity of demand be useful to a manager of a butcher’s shop? (4)

• Discuss the factors that might determine the value of price elasticity of demand for beef (6)

These GCSE Economics revision notes have been kindly provided by Peter Davies of Mill Hill School, Ripley Keep Up-todate with your GCSE Economics - Subscribe Free to Economics in the News by Email

 

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