WASSCE Economics · Paper 1 style

Theory of costs

One sample question with the full working. 2 more in the app, with instant feedback and repair sessions for the traps below.

A firm's total fixed cost is ₦600 and its total variable cost of producing 20 units is ₦1 000. Its average total cost is

A₦30
B₦80
C₦1 600
D₦50

Show the answer and working

Answer: B

(600 + 1 000)/20.

Trap A Gives only part of the answer: List every component in the definition (GDP = C + I + G + (X − M)) and tick them off before answering.

Trap C Stops at a different economic quantity: Underline what the question asks for and check the final number is THAT quantity, not a step on the way.

Trap D Gives only part of the answer: List every component in the definition (GDP = C + I + G + (X − M)) and tick them off before answering.

Traps in Theory of costs

Gives only part of the answer
List every component in the definition (GDP = C + I + G + (X − M)) and tick them off before answering.
Stops at a different economic quantity
Underline what the question asks for and check the final number is THAT quantity, not a step on the way.
Uses the wrong arithmetic operation
Write the definition in words first (TR = price × quantity; ATC = TC ÷ Q) and only then put in numbers. Check units: totals and averages cannot be added.
Confuses cost concepts
TC = TFC + TVC. AC = TC/Q. MC = ΔTC/ΔQ. Fixed costs do not change with output.

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