A sandwich producer operates from one production kitchen. Table 1 shows its monthly costs at different levels of output.
Table 1
| Sandwich packs produced per month | Fixed cost per pack | Ingredients and packaging cost per pack | Overtime and wasted ingredients cost per pack | Average cost per pack |
|---|---|---|---|---|
| 10,000 | £1.20 | £1.80 | £0.00 | £3.00 |
| 20,000 | £0.60 | £1.65 | £0.00 | £2.25 |
| 30,000 | £0.40 | £1.55 | £0.00 | £1.95 |
| 40,000 | £0.30 | £1.50 | £0.35 | £2.15 |
| 50,000 | £0.24 | £1.45 | £0.75 | £2.44 |
Analyse how the cost information in Table 1 explains the pattern in the sandwich producer's average cost.
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.