LS3 - Costs And Revenues Flashcards
Fixed costs
Fixed costs - costs that don’t change
Rent, salaries, interest, business rates, advertising
Total costs
Total costs = total fixed costs + total variable costs
Variable costs
Variable costs - costs that vary with output
Wages, utility bills, raw materials, transport
Marginal costs
Marginal costs - costs of producing each additional unit of output
Marginal cost = change in total cost/Change in quantity
Total variable costs
Total variable costs = variable costs x quantity
Average total cost and average fixed cost
Average total cost = total cost/quantity
Average fixed cost = total fixed cost/quantity
Average variable cost
Average variable cost = total variable cost/quantity
SR, LR, Marginal product of labour, law of diminishing marginal productivity
Short run and long run average cost curves
Total revenue, average revenue, marginal revenue
Total revenue (TR) = selling price x quantity sold (Q) Average revenue (AR) = TR/Q
Marginal revenue (MR) = change in TR/change in Q
Check Abdi’s
