Business Economics = Monopoly Flashcards
What is FC?
Fixed Costs
What is VC?
Variable Costs
What is TC?
Total Costs
What is the Total Costs Equation?
TC = FC + VC
What is TR?
Total Revenue
What is the Profit Equation?
Profit = TR - TC
What is X?
Units of Output
What is C?
Costs per Unit
What is p?
Price per Unit
What is the equation for Variable Costs?
Cx
What is the equation for Total Revenue?
pX
What is CM?
Contribution Margin
What is Contribution Margin?
Net Profit per Unit
What is the Contribution Margin equation?
CM = p -C
What is the Profit equation (CM)?
Profit (x) = CMx - FC
What is a Shutdown Point?
when a firm can no longer cover costs and endure losses on each unit
What is the Shutdown Point equation?
CM = p -C < 0 (less than or equal to)
How do you get to the Break-Even Output?
Profit (x) = 0
What is a Monopoly?
an economy with many buyers and one seller
Marginal Costs vs Marginal Revenue
Marginal Costs:
rate of change of costs
Marginal Revenue:
rate of change of revenue
Marginal Costs vs Marginal Revenue (Equations)
MC:
cost of increasing production by 1 unit
MR:
additional revenue from increasing production by 1 unit
Marginal Costs & Marginal Revenue Equation
TR ‘ (x) = MR
TC’ (x) = MC
