A regional launderette business is considering two pricing proposals for each washing-machine cycle. Its current position and predicted monthly sales are shown in Table 1.
| Pricing arrangement | Charge per cycle | Predicted cycles per month |
|---|---|---|
| Current price at all times | £6.00 | 20,000 |
| Proposal A: price at all times | £6.60 | 18,800 |
| Proposal B: peak-time price | £6.60 | 12,000 |
| Proposal B: off-peak price | £5.40 | 9,000 |
Table 2 shows the additional cost of introducing each proposal.
| Proposal | Additional implementation cost |
|---|---|
| A | £0 |
| B | £5,000 paid once |
All other operating costs are expected to be the same under both proposals.
Assess the case for choosing Proposal A instead of Proposal B. Use the information in Tables 1 and 2.
236 exam-style questions on AQA GCSE Economics 1.3 How prices are determined, covering 1.3.1a Demand and the factors that influence it, 1.3.1b The demand curve, 1.3.2a Supply and the factors that influence it, 1.3.2b The supply curve, 1.3.3a Determining equilibrium price, 1.3.3b Applying diagrams and showing revenue, 1.3.4a Complements and substitutes, 1.3.4b Effects of changes on related markets, 1.3.5a Price elasticity of demand, 1.3.5b Factors affecting price elasticity of demand, 1.3.5c Measuring PED and its implications, 1.3.6a Price elasticity of supply, 1.3.6b Factors affecting price elasticity of supply, and 1.3.6c Measuring PES and its implications. Each one has a worked solution and a mark scheme showing where the marks go.