3.3 - Costs and revenues

Question 1

cost per unit of output

Answer 1

average cost (AC)

Question 2

average cost equation

Answer 2

AC = TC/Q, where TC is total cost and Q is quantity/output level

Question 3

value of sales received from customer per unit of good/service sold

Answer 3

average revenue (AR)

Question 4

average revenue equation

Answer 4

AR = TR/Q = P, where TR is total revenue and Q is quantity/output level

Question 5

sum of money incurred by a business in the production process, such as costs of raw materials, wages, salaries, insurance, advertising, rent

Answer 5

cost

Question 6

costs specifically attributed to the production or sale of a particular good or service

Answer 6

direct costs

Question 7

costs that don’t vary with level of output

Answer 7

fixed costs

Question 8

costs that do not directly relate to the production or sale of specific object

Answer 8

indirect costs (overheads)

Question 9

amount of money a product is sold for

Answer 9

price

Question 10

positive different between a firm’s total revenue and its total costs

Answer 10

gross profit

Question 11

money that business earns from sale of goods and services. unit price times how many products sold

Answer 11

revenue

Question 12

money coming into a business from business activities like sponsorships, merch, royalties

Answer 12

revenue stream

Question 13

ongoing costs of operating the business

Answer 13

running costs

Question 14

sum of all variable costs and all fixed costs of production

Answer 14

total costs

Question 15

money coming into a business, usually from sales of goods/services. calculated by multiplying price of product with quantity sold

Answer 15

total revenue

Question 16

costs of production that change in proportion to level of output (raw materials, hourly wage)

Answer 16

variable costs