1.
Study the picture below and answer the questions which follow.
Woofybones Total Costs and Revenue for this week
Total Costs Total Revenue
Fixed Costs £2000
Shampoo £500
Income from customers £3000
(
a
) (i) Woofybones had 150 customers this week. Calculate the average
revenue per customer.
Answer
Show your working here.
(ii) Does it follow from your answer to (
a
)(i) that each customer was
charged the same price? Tick (
?
) the correct box.
Yes No
(iii) Explain your answer to (
a
)(ii).

(
e
) Woofybones is part of the private sector. Explain how resources are
allocated in this sector of the economy.
(
f
) (i) To which sector of production does Woofybones Dog Grooming
Parlour belong?
Tick (
?
) the correct box.

(ii) Justify your answer to (
f
)(i).

2.
Study the chart below and answer the questions which follow.
(
a
) (i) Describe fully the trend in interest rates paid to savers between 2005
and 2010.
(ii) What effect would the trend described in (
a
)(i) have on investment
and employment in the UK?
1 Investment
2 Employment
(
b
) (i) Apart from adjusting interest rates, suggest
2
actions UK banks
might take to attract more savers.

Average Interest Rates Paid to Savers by UK Banks 2005–2010
10
8
6
4
2
0
2005 2006 2007 2008 2009 2010
Year
%
2.
(
b
) (continued)
(ii) Choose
one
of the actions given in (
b
)(i) and explain how it would
be expected to work.

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