A coach operator expands its network and now runs many more journeys each year. Its national advertising campaign costs the same as before, so its advertising cost per journey falls. However, its average cost per journey starts to rise. Which is the most likely explanation for the rise in average cost?
Its fixed costs are now shared across more journeys.
Extra layers of management are slowing down its decisions.
It now employs specialist managers for marketing and finance.
Its total cost is higher because it runs more journeys.
83 exam-style questions on OCR GCSE Economics 2.6 Production, covering 2.6.1 Role of producers, 2.6.2 Importance of production and productivity, 2.6.3 Calculate cost, revenue, profit and loss, 2.6.4 Explain cost, revenue, profit and loss, 2.6.5 Cost, revenue and profit for producers, and 2.6.6 Economies of scale. Each one has a worked solution and a mark scheme showing where the marks go.