Key Equations Flashcards
1
Q
Total cost
A
Total fixed cost + total variable cost
2
Q
Average costs
A
Total cost / quantity
3
Q
Marginal cost
A
Change in total cost / change in quanityt
4
Q
Average product
A
Total product / quantity of labour
5
Q
Marginal product
A
Change in total product / change in quantity of labour
6
Q
Total revenue
A
Price x Quantity
7
Q
Average revenue
A
Total revenue x Quantity (=price)
8
Q
Marginal revenue
A
Change in total revenue / Change in quanityt
9
Q
Profit
A
Total revenue - Total costs
10
Q
Supernormal profits
A
AR > AC
11
Q
Subnormal profit
A
AR < AC
12
Q
Revenue maximisation
A
MR=0
13
Q
AC=AR shows…
A
Sales maximisation
Economic break even (no loss or gain)
Entry limit price
Normal profit
14
Q
Allocative efficiency
A
MC=P
15
Q
Productive efficiency
A
Minimum point in AC
