Question detail
Northline Gym serves small retailers while taking a loan; the case evidence includes capacity utilisation of ?10,407, sales of 272 units, and a 42% change in costs or demand. Which option best applies Calculate and interpret average unit costs?
Try the question, check the answer, then read the explanation to understand the curriculum point.
At a glance
MCQ
Type
practice
Style
Topic
Expanding a business
Question
- A. Use average unit cost to judge customer retention, shareholders impact, and the business objective in Economies and diseconomies of scale.
- B. Give only a definition of Expanding a business without using the case evidence.
- C. Treat stakeholders and shareholders as identical and ignore the effect on shareholders.
- D. Choose the largest sales figure without checking costs, finance, or context.
Answer
The correct option is: Use average unit cost to judge customer retention, shareholders impact, and the business objective in Economies and diseconomies of scale.
Explanation
This answer fits the scenario because Use average unit cost to judge customer retention, shareholders impact, and the business objective in Economies and diseconomies of scale. The case evidence gives ?11,907, 272 units, and 42%, so the answer must explain the commercial effect rather than repeat a definition. The distractors are weaker because they confuse stakeholders and shareholders, miss the shareholders, or ignore the business objective.
Common mistake
Economies and diseconomies of scale common mistake 1
Giving a vague answer instead of directly addressing: Calculate and interpret average unit costs..
Answer by clearly explaining how to calculate and interpret average unit costs..
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