A factory can use one production run to make either 1,000 electric kettles or 1,000 toasters. Each run uses the same amount of labour and capital, and the factory can sell all the output at the current market prices.
| Product | Market price per unit | Production cost per unit |
|---|---|---|
| Electric kettle | £30 | £22 |
| Toaster | £27 | £17 |
Explain which product the factory is likely to choose for its next production run.
75 exam-style questions on OCR GCSE Economics 2.4 Price, covering 2.4.1 Price and distribution of resources, 2.4.2 Equilibrium price and quantity, 2.4.3 Draw the interaction of demand and supply, 2.4.4 Analyse the interaction of demand and supply, 2.4.5 Role of markets in allocating resources, and 2.4.6 Market forces and equilibrium. Each one has a worked solution and a mark scheme showing where the marks go.