ch 27 costs Flashcards
1
Q
define costs.
A
expenses that must be met when setting up and running a business.
2
Q
define fixed costs.
A
costs that do not vary with the level of output.
3
Q
define variable costs.
A
costs that change when output levels change.
4
Q
how does output affect variable costs?
A
if a firm produces more output, variable costs will increase. if output are cut, variable costs will fall. if a firm produces nothing, variable costs will be zero.
5
Q
define total revenue.
A
money generated from the sale of output. it is price multiplied by quantity.
6
Q
how do you calculate profit?
A
total revenue - total cost = profit
7
Q
how do you calculate total revenue?
A
price x quantity = total revenue
8
Q
how do you calculate average costs?
A
total costs / quantity produced = average cost
