2 - the objective of firms Flashcards
profits
when total income or revenue is greater than the total costs
total revenue
what the firm receives for the sale of it’s product
price x number sold
average revenue
total revenue ÷ number sold
marginal revenue
the addition to total revenue from the production of an extra product
total profit
total revenue minus total costs
normal profit
the amount required to keep a factor employed in its present activity in the long run
profit maximisation
where a firm chooses a level of output where marginal revenue equals marginal costs
supernormal profit
a return above normal profit- a surplus payment
Sub-normal profit
profit below normal which should lead to the firms leaving the industry
entrepreneur
individual who organises the factors of production in order to make a profit
public limited company (plc)
a firm owned by a group of shareholders whose shares can be traded on the London stock exchange
corporation
a private enterprise firm incorporated with the register of companies
director
an individual elected by a company’s shareholders to set corporate policies
perks
non-monetary benefits like an expensive car provided by the firm
dividends
financial return from the ownership of shares in a firm
