Production, Costs and Revenue | AQA A-Level Economics (7136)
Production, Costs and Revenue
- 106 questions
- 6 subtopics
- Paper 1: Markets and market failure, and available on Paper 3
- Paper 1 and Paper 3
Production, costs and revenue is examined on Papers 1 and 3.
It builds the cost and revenue curves that every theory of the firm depends on, from specialisation and diminishing returns through to profit.
Sample questions from Production, Costs and Revenue
Answer each one closed book first, then open the answer.
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Production, productivity and specialisation
Define specialisation in an economic context.
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Specialisation occurs when individuals, firms or countries concentrate on producing a limited range of goods or services. -
Production, productivity and specialisation
How does specialisation create time savings in production?
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Workers do not need to switch between different tasks, eliminating the time lost in changing tools, locations or mental focus. -
Costs of production in the short and long run
What does average cost represent?
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Average cost is total cost divided by the quantity of output produced, showing the cost per unit. -
Costs of production in the short and long run
Why does the marginal cost curve cut the average cost curve at its lowest point?
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When marginal cost is below average cost it pulls the average down, and when it is above it pulls the average up, so the two are equal where average cost is at its minimum. -
Economies and diseconomies of scale
If a new technology cluster develops and attracts many software companies to one region, what type of cost advantage might individual firms experience?
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External economies of scale, as the concentration of firms leads to benefits such as a skilled local workforce, specialist suppliers, and shared knowledge that reduce costs for all firms in the cluster. -
Economies and diseconomies of scale
What is the minimum efficient scale?
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The minimum efficient scale is the lowest level of output at which long-run average cost is minimised, before diseconomies of scale begin. -
Revenue and profit
Why is the average revenue curve the same as the firm's demand curve?
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Average revenue and demand are the same curve, since each point gives the price at which that quantity sells. -
Revenue and profit
Calculate the marginal revenue when price falls from £7 to £6, sales rise from 8 units to 9 units.
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Total revenue falls from 7 × 8 = £56 to 6 × 9 = £54, so MR = (54 − 56) ÷ 1 = −£2.
The 6 subtopics
One subtopic is one session. Work down the list.
| Subtopic | What it covers | Questions |
|---|---|---|
| Production, productivity and specialisation | Production and productivity, the division of labour, and why specialisation needs a means of exchange. | 11 |
| Costs of production in the short and long run | The short run and long run, fixed and variable costs, total and average cost, and the shape of each curve. | 23 |
| Economies and diseconomies of scale | Internal and external economies, the sources of each, diseconomies, and minimum efficient scale. | 25 |
| Revenue and profit | Total, average and marginal revenue, why average revenue is the demand curve, and how profit is calculated. | 16 |
| The law of diminishing returns and returns to scale | Marginal returns in the short run, increasing and decreasing returns to scale, and the effect on costs. | 16 |
| Technological change | How technology changes productivity and costs, invention against innovation, and creative destruction. | 15 |
How the guide is worked
Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.
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Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
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Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
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Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.
Read the full method, the return schedule and the research behind it.
Nearby topics
AQA A-Level Economics Active Recall Guide
Every topic, not just this one. 2,344 questions with their answers.