2.2.2 sales, revenue + costs

Question 1

sales

Answer 1

• demand = no of products customer willing and able to buy
• physical quantity of goods/services sold = output =volume

Question 2

profit formula

Answer 2

total revenue - total costs

Question 3

2 ways of measuring profit

Answer 3

• profit in absolute terms (£)
• profit in relative terms (%)

Question 4

demand

Answer 4

the amount of a product hat customers are prepared and willing to purchase

Question 5

revenue

Answer 5

the amount/value of a product that customers actually buy from a firm

Question 6

what factors can affect demand

Answer 6

• external shocks
• income
• price of the product
• seasonal factors
• price of substitutes + complementary
• fashion trends

Question 7

total revenue formula

Answer 7

volume sold x average selling price

Question 8

sales volume

Answer 8

sales revenue / selling price

Question 9

costs

Answer 9

amounts that a business incurs in order to make goods and/or provide services

Question 10

fixed costs

Answer 10

costs that do not change with output

Question 11

variable costs

Answer 11

costs that change with output

Question 12

semi-fixed costs

Answer 12

costs which are fixed in the short-term, but then change once a certain level of output is reached

Question 13

short run

Answer 13

a time period where at least 1 factors of production is fixed

Question 14

long run

Answer 14

a time period when all factors of production are variable

Question 15

why are costs important

Answer 15

• can drain away the profits
• difference between making a good and poor profit margin
• main cause of cash flow problems

Question 16

examples of variable costs

Answer 16

• raw materials
• bought in stock
• wages based on hours worked
• marketing costs based on sales

Question 17

examples of fixed costs

Answer 17

• rent + business rates
• salaries
• advertising
• insure, banking, legal fees

Question 18

total cost formula

Answer 18

total fixed costs + total variable costs