Chapter 22: Firms, costs, revenue and objectives Flashcards
Total cost (TC)
The total amount that has to be spent on the factors of production used to produce a product
Average total cost (ATC)
Total cost divided by output
Fixed costs (FC)
Costs which do not change with output in the short run
Average fixed cost (AFC)
Total fixed cost divided by output
Variable cost
Costs that change with output
Average variable cost
Total variable cost divided by output
Long run
The time period when all factors of production can be changed and all costs are variable
Price
The amount of money that has to be given to obtain a product
Total revenue
The total amount of money received from selling a product
Average revenue
The total revenue divided by the quantity sold
Profit Satisficing
Sacrificing some profit to achieve other goals
Profit Maximisation
Making as much profit as possible
