Production, Costs, Revenue and profit Flashcards
What are the 3 objectives a firm may have?
- profit maximisation
- sales growth
- social/environmental concern
What are fixed costs?
costs that dont vary with output
What are variable costs?
costs that change with output
How do you calculate total costs?
total costs = variable costs + fixed costs
How do you calculate average total costs?
average total costs = total costs / quantity produced
How do you calculate average variable costs?
average variable costs = variable costs / quantity produced
How do you calculate average fixed costs?
average fixed costs = fixed costs / quantity produced
What is total revenue?
the total amount of income a firm recives
How to calculate total revenue?
total revenue = price x quantity sold
How to calculate average revenue?
average revenue = total revenue / quantity produced
How to calculate profit?
profit = total revenue - total costs
What is profit?
the amount of money a firm makes after subtracting the total costs from the total revenue
