An automated car wash can clean at most 1,200 vehicles each week. Although its usual charge is £15, a four-week discount reduced the price to £12. Conditions affecting demand other than the car wash's own price remained unchanged. Table 1 shows the average weekly results.
| Pricing period | Price per wash | Number of vehicles cleaned | Total revenue |
|---|---|---|---|
| Usual price | £15 | 800 | £12,000 |
| Discount | £12 | 1,040 | £12,480 |
Water, electricity and cleaning materials add £4 to costs for every vehicle cleaned. Every other weekly cost is the same at both prices.
Using the information provided, assess whether the car wash should make £12 its permanent price.
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.