1
Q
What is the condition for profit maximisation?
A
Occurs when MC intersects MR and MC is rising
2
Q
What is normal profit?
A
The minimum reward to keep an entrepreneur supplying their enterprise, it covers the opportunity cost of their investment that could of gone elsewhere
3
Q
What is supernormal profit?
A
The profit above normal profit level. This exceeds the opportunity cost of investing funds into the firm
4
Q
What is a loss?
A
When a firm fails to cover their total costs
5
Q
When does a firm ‘shut down’?
A
When price is less than average variable costs, when a firm cannot cover their variable costs
6
Q
Show the diagram for a short run shut down position for a firm?
A
Theme 3
flashcards
Decks in class (22)
# Cards
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3.1.1 Size and types of Firms11
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3.1.2 Business Growth21
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3.1.3 De-mergers6
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3.2.1 Business Objectives0
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3.3.1 Revenue6
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3.3.2 Costs16
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3.3.3 Economies and Diseconomies of Scale6
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3.3.4 Normal and Supernormal Profit6
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3.4.1 Efficiency20
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3.4.2 Perfect Competition4
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3.4.3 Monopolistic Competition7
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3.4.5 Monopoly21
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3.4.6 Monopsony9
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3.4.7 Contestable Markets8
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3.5.1 Demand for Labour25
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3.6.1 Government Intervention27
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3.6.2 Impact of Government Intervention7
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3.5.2 Supply of Labour23
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3.5.3 Competitive Labour Markets8
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3.5.3 Non-competitive Labour Markets37
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3.5.3 Government Intervention into Labour Markets20
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3.4.4 Oligopolys35
