GRADE IX

REVISION WORKSHEET 1-ASSESSMENT 3

A. Complete the table below:

OUTPUT TVC TFC TC ATC/AC AVC AFC

0
1 20 60
2 a20 110
3 20 150
4 20 180
5 20 200

B. Bolton Footwear in the 1990’s focused its activities on footwear to concentrate and expand that portion
of the business. They are now one of South Africa’s foremost footwear companies, focusing on defined
market niches, competitively priced and manufactured from high quality materials. The cost per pair of
footwear is calculated at $20 and were sold at $45 a pair.

The following table explains the various levels of footwear sale that took place between January 2021 and
May 2021.

OUTPUT TC ATC/AC UNITS TR AR PROFIT

SOLD
10 8
20 16
30 30
40 35
50 48

C. Choose the correct answer from the options as below:

1. The table shows the total costs and profits of a firm making bracelets.

1. What is the average revenue from selling bracelets?

A. $1

B. $2

C. $100

D.$200
2. A firm sells its products for $10 each. It produces 100 units. Its average variable cost is $5 and its average fixed cost
is $2.
How much profit does the firm make from selling 100 units?

A. $1000

B. $700

C. $500

D. $300

3 The diagram shows the costs of a firm. What is the firm's total variable cost at an output of 100 units?

A $100

B $500

C $10 000

D $50 000

4 The table shows how a firm's total cost rises with output. What is the average fixed cost of producing 8000
units?
A $4

B $5

C $32 000

D $40 000

5 The price of a firm’s product is $10. It sells 2000 units. What is the firm’s total revenue (TR) and average
revenue (AR)?

6 What would improve a firm's profits in the short run?

A government controls on its prices

B grants for the purchase of new machines

C an increase in the wages paid to its workers

D rising costs of raw materials

7. What is likely to result in the creation of a large business rather than a small business?

A expensive technology that reduces the average cost of producing standardised products

B higher incomes that allow consumers to be more selective in purchases

C unemployment that causes people to set up their own companies

D widely scattered markets that cause high transport costs

8. The table shows a firm's total revenue and total cost. What level of output gives maximum profit?

A 10 units

B 20 units

C 30 units

D 40 units

9 The table shows the costs incurred by a firm producing computers. What are the fixed costs if 3000
computers are produced?

A $20 000

B $1 430 000

C $1 450 000

D $4 020 000

10 When it produces 200 units, a firm's total variable cost is $600 and its total fixed cost is $2000. What is
the average cost at this output?

A $3

B $10

C $13

D $2600
11 Which activity can a small firm carry out more easily than a large firm?

A adapting to changing fashions

B buying in bulk
C raising finance
D undertaking expensive research

12 The table shows a firm’s average revenue and average cost. What level of output, A, B, C or D, gives
maximum profit?

13 Which of the following is a fixed cost of production?

A distribution costs
B dividends to shareholders
C overtime pay
D rental of buildings

14 The diagram shows the fixed costs, variable costs and total costs of a firm. Which distance represents the
firm’s fixed costs?
A PS

B QR

C QS

D RS

15 The table shows the total cost of producing a good at different levels of output. The firm sells 3 units.
If the total costs have to be covered, at what price must each of the 3 units be sold?

A $42

B $27

C $14

D $6

D. With appropriate analysis, identify and explain the objectives of the following firms, giving reasons for
your choice.

1. Big pharma pioneer Johnson & Johnson have focused on reducing their impact on the planet for three
decades. Their initiatives range from leveraging the power of the wind to providing safe water to
communities around the world. Their purchase of a privately-owned energy supplier in the Texas Panhandle
allowed the company to reduce pollution while providing a renewable, economical alternative to electricity.

2. The CEO of FrogDog, a consultancy firm, made the following announcement at a recent company
meeting:

“Growth can be a strategic objective that helps a company better position and market itself against its competitors.
Competitive reasons for growth include: Gaining a better market position (except in a declining industry). Providing
better product or service offerings than a competitor.”

3. Securiteam is a company that provides security and surveillance services to a large client base. There is a
separation of ownership and control within the company structure that leads to owners likely to have different
objectives to the managers and workers.
4. Swipewire is a new business that manufactures electricity wires for switchboards. The owners may lack
experience and there may be a shortage of resources. It may also be vulnerable to threat of competitors in its
market. Therefore, the primary objective for it may be just to cover its costs until it becomes well known.

5. The objective of Legal Right, a law firm providing legal services, is to ensure the best client service and
high professional legal fees. Influential factors such as professional fees, operation costs and service levels
are adjusted by the firm as a way of realising its profit goals.

E. Read the extract and answer the questions that follow:

Janovis is a company that manufactures baby medical supplies. The owners of Janovis believe profit is a
must for the economic existence of any company or business.

Shareholders (owners) are likely to benefit from higher dividends(share in profits). Higher profits enable a
firm to pay higher wages, more dividends to shareholders and survive an economic downturn. Higher profits
may lead to increased capital investment spending which will benefit other businesses in the industry such as
engineering and construction. Many other objectives such as corporate image an increasing market share can
be a way to maximise long-term profit.

Questions:

a. Explain the ways in which a firm can reduce the gap between its revenue and costs.

b. With examples, discuss how a firm can reduce its average cost per unit of output.

c. Analyse the ways in which a firm can raise its revenue.