A commercial laundry expands and now cleans many more loads each week. Because it is larger and more established, its bank lends to it at a lower interest rate. However, extra layers of managers slow down decision-making and raise its administration cost per load. All other costs per load stay the same. Under which condition would the expansion lower the laundry's average cost per load?
The percentage fall in the interest rate is greater than the percentage rise in the number of managers
The laundry's total revenue rises by more than its total costs after the expansion
The fall in interest cost per load is greater than the rise in management and administration cost per load
The laundry's total interest bill is smaller than its total administration bill after the expansion
138 exam-style questions on AQA GCSE Economics 1.4 Production, costs, revenue and profit, covering 1.4.1a Business objectives, 1.4.1b Types of costs and revenue, 1.4.1c Calculating profit, 1.4.1d Profit as an incentive to produce, 1.4.1e Moral and ethical considerations, 1.4.2a Production versus productivity, 1.4.2b Factors and benefits of productivity, 1.4.3a Economies of scale and business behaviour, 1.4.3b Types of economy of scale, and 1.4.3c Diseconomies of scale. Each one has a worked solution and a mark scheme showing where the marks go.