Business Economics = Monopoly Flashcards by Jacobus Bourchier | Brainscape

Q

What is FC?

A

Fixed Costs

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Q

What is VC?

A

Variable Costs

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Q

What is TC?

A

Total Costs

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Q

What is the Total Costs Equation?

A

TC = FC + VC

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Q

What is TR?

A

Total Revenue

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Q

What is the Profit Equation?

A

Profit = TR - TC

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Q

What is X?

A

Units of Output

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Q

What is C?

A

Costs per Unit

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Q

What is p?

A

Price per Unit

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Q

What is the equation for Variable Costs?

A

Cx

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Q

What is the equation for Total Revenue?

A

pX

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Q

What is CM?

A

Contribution Margin

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Q

What is Contribution Margin?

A

Net Profit per Unit

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Q

What is the Contribution Margin equation?

A

CM = p -C

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Q

What is the Profit equation (CM)?

A

Profit (x) = CMx - FC

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Q

What is a Shutdown Point?

A

when a firm can no longer cover costs and endure losses on each unit

Q

What is the Shutdown Point equation?

A

CM = p -C < 0 (less than or equal to)

Q

How do you get to the Break-Even Output?

A

Profit (x) = 0

Q

What is a Monopoly?

A

an economy with many buyers and one seller

Q

Marginal Costs vs Marginal Revenue

A

Marginal Costs:

rate of change of costs

Marginal Revenue:

rate of change of revenue

Q

Marginal Costs vs Marginal Revenue (Equations)

A

MC:

cost of increasing production by 1 unit

MR:

additional revenue from increasing production by 1 unit

Q

Marginal Costs & Marginal Revenue Equation

A

TR ‘ (x) = MR

TC’ (x) = MC