Context 1: The renewable energy industry
Extract A
Figure 1: Average rate of return on offshore wind farm projects
| Year | Average rate of return on offshore wind projects (%) |
|---|---|
| 2015 | 8.7 |
| 2016 | 7.9 |
| 2017 | 6.8 |
| 2018 | 6.5 |
| 2019 | 5.2 |
| 2020 | 4.8 |
| 2021 | 4.5 |
| 2022 | 3.9 |
| 2023 | 3.6 |
| 2024 | 3.4 |
Source: Global Wind Energy Council report, 2024
Note: The average rate of return is the lifetime profit an energy firm can expect to make on an offshore wind farm project, calculated as a percentage of its initial development and construction cost.
Using the data in Extract A (Figure 1), calculate the mean profit that an energy company would have made on a new offshore wind farm project in 2024, given that the average development and construction cost was €4.2bn. Give your answer to the nearest million Euros.
156 exam-style questions on AQA A Level Economics 1.4 Production, costs and revenue, covering 1.4.1 Production and productivity, 1.4.2 Specialisation, division of labour and exchange, 1.4.3 The law of diminishing returns and returns to scale (A-level only), 1.4.4 Costs of production, 1.4.5 Economies and diseconomies of scale, 1.4.6 Marginal, average and total revenue, 1.4.7 Profit, and 1.4.8 Technological change (A-level only). Each one has a worked solution and a mark scheme showing where the marks go.