Question detail
Harbour Hire serves commuters while opening a second outlet; the case evidence includes net profit margin of ?6,090, sales of 760 units, and a 21% 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 capacity utilisation, owners 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 owners.
- D. Choose the largest sales figure without checking costs, finance, or context.
Answer
The correct option is: Use average unit cost to judge capacity utilisation, owners impact, and the business objective in Economies and diseconomies of scale.
Explanation
Choose this response because Use average unit cost to judge capacity utilisation, owners impact, and the business objective in Economies and diseconomies of scale. The case evidence gives ?7,590, 760 units, and 21%, 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 owners, 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..
Related flashcards
Flashcard 1 of 5
Related practice questions
Question 1 of 5
Choose an answer, get feedback, then move sideways through the set.