AQA GCSE Economics: Productivity and economies of scale (8136) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover sections 3.1.4.2 (production and productivity) and 3.1.4.3 (economies of scale) of the AQA specification for GCSE Economics (8136), first taught from September 2017. The specification gives no tier labels. All firms and figures are invented. For explanations, see the study guide and the revision notes. The AQA GCSE Economics hub, the checklist and the free diagnostics are also available.

Questions

1. (a) Define productivity. [2] (b) A farm harvests 3,600 kg of potatoes with 12 workers in one week. The next week it harvests 4,200 kg with 15 workers. Calculate output per worker in each week and state whether production and productivity rose or fell. [4]

2. For each case, state the factor that influences productivity. [4]

• A joiner attends a course on new design software.
• A warehouse installs conveyor belts.
• A firm pays a bonus to staff who meet weekly targets.
• A firm reorganises so that each worker repeats one task.

3. Explain two ways in which a firm could raise labour productivity. [4]

4. A tailoring workshop pays each worker £390 a week. Output per worker is 20 garments a week. New machines raise it to 26 garments a week. (a) Calculate by what percentage productivity has risen. [2] (b) Work out the labour cost of one garment before and after the change. [2] (c) State one way consumers might benefit. [1]

5. Explain one benefit of higher productivity to a firm and one benefit to the wider economy. [4]

6. (a) Define economies of scale. [2] (b) A firm’s total cost rises from £10,000 at 1,000 units to £16,000 at 2,000 units. Show that this is consistent with economies of scale. [2]

7. A paint manufacturer’s costs at different levels of output are shown.

Output (litres)	Total cost (£)
500	7,500
1,000	12,000
2,000	20,000
4,000	36,000
6,000	57,000
8,000	80,000

(a) Calculate average cost at 500, 4,000 and 8,000 litres. [3] (b) Calculate the percentage fall in average cost between 500 and 4,000 litres. [2] (c) State the output in the table with the lowest average cost and explain what happens after it. [2]

8. Name the type of economy of scale in each case. [5]

• A chain negotiates a discount by ordering tins in huge quantities.
• A growing firm appoints a specialist marketing manager.
• A large company is offered a lower interest rate than a small one.
• A firm buys a large automated mixing machine.
• A firm sells in several regions, so a poor season in one matters less.

9. Explain one cause of diseconomies of scale and its effect on average cost. [3]

10. Explain two ways in which a firm with economies of scale may behave differently from a small rival. [4]

11. A firm sells at £9 a unit. Its total cost is £45,000 at 6,000 units, £70,000 at 10,000 units and £112,000 at 14,000 units. (a) Calculate average cost at each output. [3] (b) Calculate profit at each output. [3] (c) State the output with the highest profit and explain why producing more would not help. [2]

12. A small furniture firm plans to double its output by building a bigger factory. Evaluate whether it should go ahead. [8]

Answers

1. (a) Output measured against an input [1], such as per worker or per hour worked [1]. [2] (b) Week 1: 3,600 / 12 = 300 kg per worker [1]. Week 2: 4,200 / 15 = 280 kg per worker [1]. Production rose from 3,600 to 4,200 kg [1]. Productivity fell from 300 to 280 kg per worker [1]. [4] Examiner insight: State both measures and keep the two terms apart. An answer saying only “output rose” tells the reader nothing about productivity.

2. Training or skills [1]. Capital or technology [1]. Motivation [1]. Division of labour, or better organisation [1]. [4] Examiner insight: Match each factor to the clue in the case. General words such as “better working” are unlikely to identify the factor.

3. Any two, each with a reason. Train workers [1], so they work faster and make fewer errors, raising output per worker [1]. Buy better machines [1], so each worker can produce more in the same hour [1]. Other valid options include bonuses, which raise motivation, or division of labour. [4] Examiner insight: A method on its own is a start. Credit comes from explaining how it raises output per worker, not merely output.

4. (a) (26 − 20) / 20 [1] × 100 = 30% [1]. [2] (b) Before: 390 / 20 = £19.50 [1]. After: 390 / 26 = £15.00 [1]. [2] (c) Lower prices, since the firm’s costs per garment are lower [1]. [1] Examiner insight: Write the formula and the substitution so your method is visible. Use the original value as the base for a percentage change.

5. Firm: output per worker rises, so labour cost per unit falls [1], giving higher profit or room to cut the price [1]. Economy: more output from the same resources [1], leading to economic growth and higher living standards [1]. [4] Examiner insight: Name the beneficiary asked for. A benefit given to consumers will not answer a question about the firm.

6. (a) Average cost per unit falls [1] when the firm’s scale of production rises [1]. [2] (b) Average cost at 1,000 units is 10,000 / 1,000 = £10 [1]. At 2,000 units it is 16,000 / 2,000 = £8, which is lower, even though total cost rose [1]. [2] Examiner insight: A “show that” answer needs the calculation and a concluding statement. The conclusion should refer to average cost, not total cost.

7. (a) 500 litres: 7,500 / 500 = £15 [1]. 4,000 litres: 36,000 / 4,000 = £9 [1]. 8,000 litres: 80,000 / 8,000 = £10 [1]. [3] (b) (9 − 15) / 15 [1] = −0.4, so a 40% fall [1]. [2] (c) 4,000 litres has the lowest average cost, £9 [1]. Beyond it, average cost rises (£9.50 at 6,000, £10 at 8,000), showing diseconomies of scale [1]. [2] Examiner insight: Work out average cost for each output before comparing. Reading total cost alone leads to the wrong conclusion, because total cost always rises with output.

8. Purchasing [1]. Managerial [1]. Financial [1]. Technical [1]. Risk-bearing [1]. [5] Examiner insight: Use the exact names from the specification. Wording such as “bulk buying” is a description of purchasing, not the type.

9. Communication problems [1]: as the firm gets bigger, there are more layers of management, so decisions are slow and instructions are misunderstood [1]. This causes mistakes and delays, so cost per unit rises [1]. Coordination or motivation are equally valid causes. [3] Examiner insight: End the chain with average cost rising. Stating the cause alone is incomplete.

10. It can cut its price and still make a profit [1], because its average cost is lower, so rivals with higher costs may lose customers [1]. Its low costs form a barrier to entry [1], because a new or small firm cannot match its price [1]. [4] Examiner insight: “Lower prices” gains little without the reason. Always connect behaviour back to lower average cost.

11. (a) 45,000 / 6,000 = £7.50 [1]. 70,000 / 10,000 = £7.00 [1]. 112,000 / 14,000 = £8.00 [1]. [3] (b) 6,000 units: 9 × 6,000 = 54,000, less 45,000 = £9,000 [1]. 10,000 units: 90,000 − 70,000 = £20,000 [1]. 14,000 units: 126,000 − 112,000 = £14,000 [1]. [3] (c) 10,000 units gives the highest profit [1], because beyond that average cost rises (diseconomies of scale): the extra 4,000 units cost £42,000, or £10.50 each, more than the £9 price [1]. [2] Examiner insight: Profit is revenue minus total cost. A higher output does not by itself mean a higher profit, and the table shows this.

12. Sample answer; other valid points can be credited. Benefit: technical economies [1], as a bigger factory with larger machines spreads fixed costs over more units, lowering average cost [1]. Benefit: purchasing economies [1], as bulk orders earn discounts, so the firm can cut prices or raise profit per unit [1]. Cost: the factory needs large finance [1], so if demand is weaker than expected the firm may not cover the repayments [1]. Cost: the firm may grow beyond its lowest average cost, so diseconomies raise unit costs [1]. Judgement: the firm should go ahead only if demand is strong enough to sell the doubled output and the new size is below the point where diseconomies start [1]. [8] Examiner insight: Evaluation improves when you say what the decision depends on, such as demand or the level of output, and reach a conclusion that follows from your own argument.

Where marks are usually lost

• Treating higher production as higher productivity.
• Giving total cost when the question asks for average cost.
• Leaving out the unit (loaves per worker, £ per unit).
• Dividing by the new value when finding a percentage change.
• Naming a type of economy of scale without linking it to lower unit cost.
• Stating a cause of diseconomies without saying that average cost rises.
• Writing about benefits only in an evaluation answer, with no costs and no judgement.
• Assuming that a bigger firm always has a higher profit.

Next steps

• Review the revision notes and the study guide.
• See the AQA GCSE Economics hub and the checklist.
• Take the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

AQA, GCSE Economics (8136) specification, for first teaching from September 2017, sections 3.1.4.2 and 3.1.4.3.