OxfordAQA International GCSE Economics: Costs, revenue, productivity and scale (9214) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover section 3.1.4 (Production, costs, revenue and profit) of Topic 1, How markets work, in the OxfordAQA International GCSE Economics (9214) specification, for exams from May/June 2025 onwards. All firms and figures here are made up, and money is in an unnamed currency unit. Work through the study guide and revision notes first, and see the course hub, the checklist and the free diagnostics.

Questions

1. State two business objectives, other than maximising profit, that a firm might have. [2]

2. A pottery workshop has total fixed costs of 900 a month. In one month it makes 300 mugs, and total variable costs are 1,650. Calculate:

(a) total cost [1] (b) average fixed cost [1] (c) average variable cost [1] (d) average (total) cost. [1]

3. A firm sells 450 units at an average revenue of 14. Its average cost is 11.80. Calculate its profit. [3]

4. In Year 1 a market has total sales of 140,000 units and Firm Z sells 16,800. In Year 2 the market is 150,000 units and Firm Z sells 21,000.

(a) Calculate Firm Z’s market share in Year 1. [1] (b) What is its market share in Year 2? [1] (c) Calculate the percentage growth in Firm Z’s sales. [1]

5.

(a) Explain two ways a firm might increase its profit. [4] (b) Costs stay the same while the price of a product rises. Explain why producers then have a reason to produce more. [3]

6. A chair workshop employed 20 workers and made 3,000 chairs in Year 1. In Year 2 it employed 22 workers and made 3,520 chairs.

(a) Work out how many chairs each worker made, on average, in Year 1 and in Year 2. [2] (b) By what percentage did productivity change between the two years? [2] (c) Explain the difference between the change in production and the change in productivity. [2]

7. Explain two factors that might raise a firm’s productivity. [4]

8. The table shows a firm’s total costs at different levels of output.

Output	2,000	4,000	6,000	8,000	10,000
Total cost	30,000	50,000	66,000	88,000	120,000

(a) Calculate average cost at 2,000 and at 6,000 units. [2] (b) Between which two output levels does the firm enjoy economies of scale? [1] (c) Above what output do diseconomies of scale begin? [1] (d) Calculate the percentage change in average cost between 2,000 and 6,000 units. [1]

9. A furniture maker is doubling its output. Explain two different types of economy of scale it might gain. [6]

10. Explain two causes of diseconomies of scale. [4]

11. A clothing producer makes 40,000 garments a year at an average cost of 9.50. A new supplier would cut its average cost by 12%, but the supplier’s factory has unsafe working conditions and no pollution controls. Evaluate whether the producer should switch. [8]

12. Assess whether growth is likely to benefit a firm. [6]

Answers

1. Sales growth [1]; increasing market share [1]. [2] Examiner insight: Name the objective itself; “make more money” repeats profit and does not answer the question.

2. (a) TC = 900 + 1,650 = 2,550 [1] (b) AFC = 900 / 300 = 3.00 [1] (c) AVC = 1,650 / 300 = 5.50 [1] (d) ATC = 2,550 / 300 = 8.50, which equals 3.00 + 5.50 [1] Examiner insight: Write each formula before substituting; the AFC plus AVC check also catches slips.

3. TR = 14 x 450 = 6,300 [1]. TC = 11.80 x 450 = 5,310 [1]. Profit = 6,300 - 5,310 = 990 [1]. [3] Examiner insight: Average figures must be multiplied back by output; reporting 2.20, the profit per unit, answers a different question.

4. (a) 16,800 / 140,000 x 100 = 12% [1] (b) 21,000 / 150,000 x 100 = 14% [1] (c) (21,000 - 16,800) / 16,800 x 100 = 25% [1] Examiner insight: Divide by the market total, not by the firm’s own sales, and quote the percentage sign so that the figure cannot be read as a quantity.

5. (a) Reduce average costs [1], for example a cheaper supplier lowers variable cost per unit, so total cost falls and profit rises if revenue holds [1]. Increase revenue [1], for example raise the price, so TR = price x quantity rises provided sales do not fall by too much [1]. [4] (b) At a higher price and unchanged cost, profit per unit is greater [1]. This rewards producers for supplying, giving them an incentive to expand output [1]. They use more resources, so quantity supplied rises along the supply curve [1]. [3] Examiner insight: A way of raising profit scores best when you say how it changes cost or revenue; a bare “advertise more” or “be efficient” stays unexplained.

6. (a) Year 1: 3,000 / 20 = 150 per worker [1]. Year 2: 3,520 / 22 = 160 per worker [1]. (b) (160 - 150) / 150 x 100 [1] = 6.7% rise [1]. (c) Production rose by (3,520 - 3,000) / 3,000 x 100 = 17.3% [1], which is more than the 6.7% productivity gain because the firm also employed more workers, 22 rather than 20 [1]. Examiner insight: Use the figures in part (c); the claim that production and productivity differ is clearer when both percentages are shown.

7. Training [1]: workers with more skills make fewer errors and work faster, so output per worker rises [1]. New machinery [1]: each worker has better capital to work with and makes more units per hour [1]. (Other valid factors: motivation or pay incentives, better management, better working conditions, specialisation.) [4] Examiner insight: Link each factor to output per worker separately; two factors that are really one idea, such as training and education, add little if both are given.

8. (a) 30,000 / 2,000 = 15.00 [1]. 66,000 / 6,000 = 11.00 [1]. (b) Average cost falls from 15.00 at 2,000 units to 11.00 at 6,000 units, so economies of scale occur between 2,000 and 6,000 units (average cost is level at 11.00 up to 8,000) [1]. (c) Average cost at 10,000 is 120,000 / 10,000 = 12.00, higher than 11.00 at 8,000, so diseconomies begin above 8,000 units [1]. (d) (11 - 15) / 15 x 100 = -26.7% [1]. Examiner insight: Judge economies and diseconomies from the movement of average cost, not total cost, which rises at every step.

9. Purchasing [1]: larger orders of timber and fittings earn bulk discounts [1], so material cost per unit and therefore average cost fall [1]. Risk-bearing [1]: a large firm sells many products to many customers [1], so one lost customer or a failed line hurts less, which allows it to invest in bigger projects at lower average cost [1]. (Managerial, financial or technical are also valid.) [6] Examiner insight: Naming the type is only the first step; credit comes from the reason average cost falls. Giving two examples of one type adds little.

10. Communication problems [1]: with more layers of management, messages are slow or distorted, so decisions are delayed and mistakes cost more [1]. Loss of motivation [1]: workers in a very large firm feel remote, put in less effort, and productivity falls, raising average cost [1]. (Other valid causes: poor coordination, loss of managerial control.) [4] Examiner insight: Finish each cause with its effect on average cost; “the firm is too big” is only a restatement of the term.

11. The 12% cut is 9.50 x 0.12 = 1.14 per garment [1], so the saving is 1.14 x 40,000 = 45,600 a year [1]. This raises profit or allows lower prices and market share [1]. But unsafe conditions harm workers and a lack of pollution controls harms the community and environment [1], a conflict between profit and ethical interests [1]. Customers may boycott the brand, regulators may fine it, and good staff may leave, so long-run profit could fall [1]. The producer could ask the supplier to improve, or choose another supplier [1]. Judgement: switching is hard to justify unless the supplier fixes its conditions, since the 45,600 saving has to be weighed against the reputation and legal risk, and this depends on how price-sensitive customers are [1]. [8] Examiner insight: Reach a decision, back it with the saving of 45,600 and a reason; a list of benefits and harms with no conclusion only describes.

12. Benefit: economies of scale such as bulk buying lower average cost [1], which raises profit per unit or allows lower prices [1]. Benefit: a larger share of the market and risk spread over more products [1]. Cost: funding needed for growth, which may mean debt [1]; diseconomies of scale if the firm grows beyond its efficient size [1]. Judgement: growth benefits the firm if it stays within the range where average cost is falling and managers keep control; beyond that the costs outweigh the benefits [1]. [6] Examiner insight: Pair each benefit with a cost, then close with a verdict that depends on something stated, such as steady demand or good management.

Where marks are usually lost

• Reporting average cost when total cost was asked, or the reverse.
• Forgetting to multiply by output when finding total revenue or profit from average figures.
• Dividing by the firm’s own sales instead of the market total in market share.
• Stating that productivity rose because production rose without checking the number of workers.
• Naming a type of economy of scale with no reason for lower average cost.
• Describing diseconomies of scale as rising prices, rather than rising average cost.
• Listing ethical problems with no response by the producer.
• Giving benefits of growth only, with no cost and no judgement.

Next steps

• Revise from the revision notes and read the study guide.
• Visit the course hub and the checklist.
• Take the free 10-minute diagnostics to find weak spots.
• Book a free trial class.

Official syllabus

OxfordAQA International GCSE Economics (9214), version 1.0, for exams from May/June 2025 onwards, published by OxfordAQA. Sections 3.1.4.1, 3.1.4.2 and 3.1.4.3.