Practise 49 real questions on Firms, production and costs from 2021 to 2026. See the answer and explanation as soon as you answer.
Firms, production and costs is one of the 8 main topics in our O Level Economics (Cambridge (CAIE) 2281) question bank, and about 13% of its real questions come from it. Tayyari Karo has 49 real questions on this topic from 2021 to 2026, from Paper 1, Paper 2; 42 are multiple choice and marked instantly, and the rest are structured questions with a model answer. By difficulty: 34 medium, 13 easy, 2 hard.
Work through the questions below, then open the explanation for each one. Redo the ones you missed a few days later.
These are real past-paper questions. Think of your answer first, then open the explanation.
What does not influence the size of a firm?
Answer: B. the sector in which the firm operates
Keyed answer B per the published mark scheme (which records 0 marks for this item, so treat with caution).
A firm chooses to become more capital-intensive. What is least likely to have increased?
Answer: A. interest rates
Higher interest rates make borrowing for machinery dearer, discouraging capital-intensive methods.
A firm has fixed costs of $20. Its total variable costs are $40 at an output of 10, $60 at 20, $80 at 30 and $100 at 40. What happens to average total cost over this output range?
Answer: A. It falls continuously.
Average total cost is $6, $4, $3.33 and $3, so it falls throughout the range.
A firm's average revenue is $20. It sells 1000 units. What are the firm's total revenue and the price of the product?
Answer: C. price $20, total revenue $20 000
Average revenue equals price, so price is $20 and total revenue is $20 x 1000 = $20 000.
A firm produces five units of output at an average cost of $20 per unit. The cost of the sixth unit is $26. What is the average cost of six units?
Answer: D. $21
Total cost of five units is 5 x $20 = $100; adding $26 gives $126, so average cost is $126 / 6 = $21.
A company mining cobalt invests in machinery to replace some workers. Eventually diseconomies of scale occur. What could cause this situation?
Answer: A. As more cobalt is mined average costs increase.
Diseconomies of scale exist when expanding output raises average cost.
| Session | Paper 1 | Paper 2 |
|---|---|---|
| May/June 2026 | 4 | – |
| May/June 2025 | 4 | 1 |
| Oct/Nov 2025 | 3 | 1 |
| May/June 2024 | 5 | 1 |
| Oct/Nov 2024 | 5 | – |
| May/June 2023 | 4 | – |
| Oct/Nov 2023 | 3 | 1 |
| May/June 2022 | 4 | – |
| Oct/Nov 2022 | 1 | – |
| May/June 2021 | 5 | 1 |
| Oct/Nov 2021 | 4 | 2 |
49 real O Level Economics (2281) questions on Firms, production and costs from 2021 to 2026, from Paper 1, Paper 2. Each one shows the year, session and paper it came from.
Yes. Every question shows the correct answer and a short explanation the moment you answer.
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