IGCSE Economics Paper-1: Specimen Questions with Answers 44 - 45 of 64

Question 44

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Question

MCQ▾

In the following graph what does point A refers to-

Choices

Choice (4)
a.Maximum revenue
b.Loss
c.Break-even point
d.Maximum Profit

Answer

c.

Explanation

  • In accounting, the breakeven pointbreakeven point known as is calculated by dividing the fixed costs of production by the price per unit minus the variable costs of production. The the level of production at which the costs of production is equal to the revenues for a product.
  • In simple terms, the break-even point is defined as a point where total costs (expenses) and total sales (revenue) are equal. Break-even point can be described as a point where there is no net profit or loss.
  • The firm is at “break even” i. e. no profit or no loss. Any company which wants to make abnormal profit, desires to have a break-even point. Graphically, it is the point where the total cost and the total revenue curves meet.
  • Revenue – Total costs = 0

Question 45

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Question

MCQ▾

The price of good decreases by 10 % and the quantity demanded for a certain period of time increases by 15%. In these conditions:

Choices

Choice (4)
a.The revenues earned by producers decrease
b.The revenues earned by producers increase
c.The revenues are not affected
d.The expenditure of company rises.

Answer

b.

Explanation

  • Clearly, from the question we can see that the change in quantity demanded is more than the change in price, which will give greater profits to the producers.
  • This type demand is referred to as elastic demand where the percentage change in price is less than the percentage change in quantity demanded. The degree of elasticity is greater than

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