Average unit costs (AQA GCSE Business): Quizzes
📚Quizzes
Practise the questions
12 questions from this quiz
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Practise the questions
12 questions from this quiz
What does average unit cost represent?
What does average unit cost represent?
Cost to produce a single item
How is average unit cost calculated?
How is average unit cost calculated?
Total Costs ÷ Output
What two components make up total costs?
What two components make up total costs?
Fixed Costs + Variable Costs
Which is an example of fixed costs?
Which is an example of fixed costs?
Rent
Which costs change with production levels?
Which costs change with production levels?
Variable costs
What are economies of scale?
What are economies of scale?
Lower average unit cost from more output
What can cause diseconomies of scale?
What can cause diseconomies of scale?
Communication & coordination problems
If total costs are £300 and output is 50 units, what is the average unit cost?
If total costs are £300 and output is 50 units, what is the average unit cost?
£6
In the bolt example, which output level has the lowest average unit cost?
In the bolt example, which output level has the lowest average unit cost?
4,000 bolts
Why do average unit costs decrease as output increases initially?
Why do average unit costs decrease as output increases initially?
Fixed costs spread across more units
What advantage do businesses with lower average unit costs have?
What advantage do businesses with lower average unit costs have?
Lower prices or higher profit margins
What must happen for a business to generate profit?
What must happen for a business to generate profit?
Selling price must exceed average cost