Firm X produces 1,000 units at a total cost of £20,000. Firm Y produces 5,000 units at a total cost of £70,000 after receiving bulk-buying discounts. Which conclusion is best supported?
Firm Y's average cost is £6 higher because its total cost is larger
Both firms have an average cost of £20
Firm X has economies of scale because it produces less
Firm Y's average cost is £14, which is £6 lower and is consistent with economies of scale
30 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.