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SHS Economics · Year 2

Production, Cost & Revenue practice questions

Cost concepts (fixed, variable, total, average, marginal), revenue concepts, and returns to scale in production.

24 questions in this topic: 8 recall, 4 applying skills and concepts, 11 strategic thinking and 1 extended thinking. Every one carries a written explanation.

Sample questions

3 of 24 questions in this topic. Sign up to answer them and see the explanations.

  1. Question 1Strategic thinking

    Ama's juice stand has fixed costs (rent GH¢100) and variable costs (pineapples GH¢300, wages GH¢200) for 200 cups. What is her Total Cost?

    • aGH¢600 (100 + 300 + 200)
    • bGH¢500, counting only the variable costs
    • cGH¢100, counting only the fixed cost
    • dGH¢300, counting only the pineapple cost
  2. Question 2Skills & concepts

    In Stage 1 (increasing returns) of production, what happens to marginal product as more of the variable input is added?

    • aMarginal product continues to increase, since each additional unit of input contributes more to output than the previous one
    • bMarginal product falls immediately with the very first unit of input added
    • cMarginal product becomes negative immediately
    • dMarginal product stays exactly the same regardless of input added
  3. Question 3Recall

    In the short run, which of these is true about a firm's factors of production?

    • aAt least one factor of production, such as capital, is fixed
    • bAll factors of production are fully variable
    • cLabour is always fixed while capital is always variable
    • dNo factor of production can be changed at all

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