1. Recap Test of Key terms Theme 1 Topic 6 Define the following terms (3)
Fixed Cost
Variable Cost
Average/Unit Cost
Calculate the BEP if the FC = £1000, VC = £20, Price = £30 (3)
What would be the margin of safety if expected level of sales are 200 units? (1)
Why is break even analysis useful to a business? (3)

2. Business objectives and how they link to pricing decisions
Starter - Growing strawberries pg 18

3. Lesson Objectives
All students will consider the differing objectives businesses set and how pricing decisions link to these
Most students will be able to understand the why these differ
Some students will understand the trade-offs involved when setting objectives and price

4. Recap – Economies of scale
Economies of scale are the cost advantages that a business can exploit by expanding their scale of production. 
The effect of economies of scale is to reduce the average (unit) costs of production.

5. Recap - Diseconomies of scale
Increases unit cost that occur as a business grows larger, often associated with communications issues or costs of coordination. Imagine you add more people to be involved in decision making processes, it may eventually become harder to share information effectively.
Beyond a certain point, increasing size will bring disadvantages rather than advantages and push average costs up.

7. Recap - Minimum efficient scale
This is the level of output at which average or unit costs can be minimised
Economies of scale will push average cost down as output increases until diseconomies outweigh any further possible economies

8. Marginal Cost and Revenue
Marginal Revenue is the change in revenue from selling one more unit
Marginal Cost is the change in total costs from selling one more unit
Look at worked example top of pg 21

9. Impact of objectives on pricing decisions
Consider questions pg 22
When deciding on the price to set businesses have to consider their objectives and how the price they set can affect the success of meeting these – things to consider;
Profit maximisation?
Reputation?
Going for growth?
Developing brand loyalty?
Ethical stance?

10. HWK
Revise for test on 1.1 – scarcity choice and potential conflict

11. task
Exam style questions pg 23