A regional waste-collection company has expanded its fleet. After expanding, it buys 180,000 litres of diesel a year and has a £2,400,000 loan. The terms it is offered change as shown.
| Item | Before expansion | After expansion |
|---|---|---|
| Price per litre of diesel | £1.42 | £1.38 |
| Interest rate on its loan | 7.0% | 6.5% |
Explain how the company's expansion could have led to each of the changes shown.
Calculate the total annual saving the company makes from the new terms, compared with paying the old price and interest rate on the same diesel and loan.
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.