3.3 revenues, costs & profits Flashcards
SR assumes
at least one fixed factor of production
LR assumes
all factors of production are variable
two types of costs
explicit implicit
implicit costs
opportunity cost
explicit costs
real life moneys !!
examples of fixed costs
rent salaries interest on loands adverts business rates (contracts)
examples of variable costs
wages
utility bills
raw materials
transport
total cost
TFC + TVC
avg fixed cost
TFC/Q
SR cost curves look at … and will be outweighed by …
impact of productivity
diminishing marginal productivity
LR cost curves look at … and eventually are outweighed by …
factors of production prices
diseconomies of scale
MES refers to
minimum efficient scale
lowest level of output required to exploit economies of scale
internal economies of scale
really fun mums try making pies
risk management financial management tech marketing purchasing
external economies of scale
better transport infrastructure
supplies manufactuer
diseconomies of scale is caused by the 3Cs and a M
control
communication
coordination
motivation
total revenue
P X Q
avg revenue
TR / Q = P
marginal revenue
△TR / △Q
assumptions of perfect competition
many buyers & sellers (infinite) homogenous goods price taker no barriers to entry perfect informationq
assumptions of imperfect competition
few buyers & sellers price makers differentiated goods high barriers to entry/exit imperfect information
types of economies of scale
purchasing
technical
managerial
finanical
diseconomies of scale 2 types
communication
coordination
MES is
what is the scale of production when the LRAC is at its lowest
internal economies of scale
increase in scale of production
external economies of scale
increase in scales of production industry wide
what does it mean if the MES is at a low point
large number of firms in the market
