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SingaporeEconomics

Firms, Production and Costs

4 dot points across 4 inquiry questions. Click any dot point for a focused answer with worked past exam questions where available.

How do a firm's costs and revenue combine to give its profit?

Define fixed, variable and total costs, average cost, revenue and profit, and calculate them
A clear O-Level answer on costs, revenue and profit. The difference between fixed and variable costs, how to work out total and average cost, total revenue, and profit, with simple worked calculations.
8 min answer →

Why does producing on a larger scale often lower the cost per unit, and why can it sometimes raise it?

Explain economies and diseconomies of scale and how they affect a firm's average cost as it grows
A clear O-Level answer on economies and diseconomies of scale. Why average cost falls as a firm grows, the main types of economy of scale, why average cost can rise again, and how this shapes firm size.
8 min answer →

Do firms only want to make as much profit as possible, or do they pursue other goals too?

Explain the goals firms may pursue, including profit, survival, growth, market share and social aims
A clear O-Level answer on the goals of firms. Why profit maximisation is the usual assumption, the other goals firms may have such as survival, growth, market share and social responsibility, and why goals can conflict.
7 min answer →

Why do some firms stay small while others grow very large?

Describe the main types and sizes of firms and explain why small firms survive alongside large ones
A clear O-Level answer on the types and sizes of firms. The difference between firms and industries, why firms grow, the ways they grow, and why small firms continue to survive alongside large ones.
8 min answer →