A commercial laundry charges £3.00 to clean a shirt. Higher energy and detergent prices raise its cost of cleaning each shirt from £2.20 to £2.70, while its charge stays at £3.00.
What is the most likely effect on the laundry's incentive to supply shirt-cleaning services?
It is unchanged because the charge for cleaning each shirt has not changed
It disappears because the laundry now makes a loss on every shirt it cleans
It becomes weaker because the gap between the charge and the unit cost has narrowed
It becomes stronger because the laundry must clean more shirts to cover its higher costs
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.