A ceramic-tile producer records the following monthly costs at different levels of output.
| Tiles produced per month | Total cost |
|---|---|
| 4,000 | £48,000 |
| 8,000 | £80,000 |
| 12,000 | £150,000 |
Calculate the average cost at each level of output.
Explain what the change in average cost from 8,000 to 12,000 tiles suggests about the effect of expanding production, and give one reason average cost might rise.
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.