Cambridge IGCSE · Economics (0455)
4 multiple-choice questions marked as you go, and 4 written questions with worked solutions. All on Firms’ costs, revenue and objectives.
A small, ethical clothing brand known for its fair trade practices and sustainable materials consistently sets its prices to cover costs and achieve a modest profit margin, even if higher prices could yield significantly greater profits. Which objective is this firm most likely prioritizing over pure profit maximisation?
A new technology startup decides to offer its primary software product at a very competitive price, even if it means initially lower profit margins. The company also invests heavily in marketing and expanding its user base rapidly across different regions. Which objective is this firm most likely prioritising?
Which of the following is an example of a fixed cost for a manufacturing firm?
Which of the following is an example of a variable cost for a firm?
Define the firm objective of social welfare.
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State the formula used to calculate a firm's average fixed cost (AFC).
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A firm aims for growth as its primary objective. State two ways in which a firm might measure its growth over a period of time.
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A firm's primary objective is often assumed to be profit maximisation, but other goals exist.
(a) Explain the objective of survival and identify a situation where a firm would prioritise this over profit.
(b) Describe the objective of social welfare and state which type of firm is most likely to pursue it.
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