中文（繁體）
中文（简体）
English
S5 Economics paper 1: long-run cost basics
S5 Economics paper 1: long-run cost basics
Ten items start from total and average cost, then separate economies from diseconomies of scale, ending with minimum efficient scale and external economies.
Direct answers Items 01 to 03 compute average and total cost, 04 to 06 split average fixed cost and judge returns to scale, 07 to 09 cover minimum efficient scale plus internal and external economies, and 10 corrects a reversed definition.
01 Paper details (check answers afterwards)
| Item | Detail |
|---|---|
| Questions | 10 |
| Suggested time | 25 |
| Difficulty mix | Foundation 3 · Intermediate 3 · Challenge 3 · Error redo 1 |
| Chapter | Chapter: S5 Economics Long-run Cost and Economies of Scale |
| Level | S5 |
02 Questions (10 items)
- FoundationA firm’s total cost is $5,000 at an output of 100 units. Find the average cost.
- FoundationA firm produces 300 units at a total cost of $9,000. Find the average cost.
- FoundationA firm has fixed cost $800 and variable cost $12 per unit. Output is 50 units. Find total cost.
- IntermediateUsing the same firm, find average fixed cost and average cost.
- IntermediateLong-run average cost is $60 at 100 units and $50 at 200 units. Is this economies or diseconomies of scale?
- IntermediateIf all inputs double and output rises from 100 to 180 units, what returns to scale is shown?
- ChallengeA firm reaches minimum long-run average cost at 400 units. Market demand is 2,000 units. How many firms can reach that cost level?
- ChallengeWhich of these is an internal economy of scale? (a) the whole industry expands and transport costs fall (b) the firm grows and can use specialised machinery (c) the government cuts tax
- ChallengeAn electronics cluster grows, bringing skilled workers and parts suppliers, so every firm faces lower costs. What kind of economies of scale is this?
- Error redoA student sees long-run average cost rise from $40 to $46 and calls it economies of scale. What is wrong?
03 Answers and one-line notes
| # | Answer | One-line note |
|---|---|---|
| 1 | $50 per unit (5,000 / 100). | Average cost is total cost divided by output. |
| 2 | $30 per unit (9,000 / 300). | The same fixed cost is spread over more output, so average cost falls. |
| 3 | $1,400 (800 + 12 x 50). | Total cost equals fixed cost plus variable cost. |
| 4 | Average fixed cost $16 (800 / 50); average cost $28 (1,400 / 50). | Average cost equals average fixed cost plus average variable cost. |
| 5 | Economies of scale. | Long-run average cost falling as scale rises is economies of scale. |
| 6 | Decreasing returns to scale (diseconomies of scale). | Output rises by less than inputs, so unit cost increases. |
| 7 | Five firms (2,000 / 400). | Minimum efficient scale determines how many firms the market can support. |
| 8 | (b). | Internal economies come from the growth of the firm itself. |
| 9 | External economies of scale. | External economies arise from the size of the whole industry, not one firm. |
| 10 | Rising average cost means diseconomies of scale. | Economies of scale require long-run average cost to fall, which is the opposite direction. |
04 What to do after marking
- After marking, redo only the wrong items and write down which step went wrong (formula, unit, or misread number).
- Repeat the same item two days later; move to the next paper only when both attempts are correct.
- Parents only need the answer and note columns; there is no need to explain every item.
Book an Economics tutorTutor Registration →
Questions and answers are written originally by the TutorZone team and are not taken from any school, publisher or examination authority paper. Every value is checked by computer.