A tree surgery business is considering leasing one of two wood chippers for one year. It expects to complete 1,600 jobs during the year. Each wood chipper would reduce the variable transport and disposal cost for each job. Apart from the costs shown in the table, the business's annual costs would remain unchanged.
| Wood chipper | Annual lease cost | Reduction in variable cost per job |
|---|---|---|
| P | £18,000 | £14.00 |
| Q | £12,000 | £10.00 |
Using the table, calculate how much greater the net reduction in the business's annual total cost would be with wood chipper P than with wood chipper Q.
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.