Revenue and profits

Question 1

average revenue?

Answer 1

revenue per unit

Question 2

marginal revenue?

Answer 2

change in total revenue from selling one extra unit

Question 3

price taking businesses?

Answer 3

price taker has to sell at market price

Question 4

Revenue maximisation?

Answer 4

output when marginal revenue = 0

Question 5

revenue synergies?

Answer 5

the ability to sell more products and services or raise prices after a business merger

Question 6

supernormal profit?

Answer 6

profit in excess of normal profit

Question 7

Marginal profit?

Answer 7

the increase in profit from selling one extra unit

Question 8

Normal profit?

Answer 8

the minimum profit needed to keep factor inputs in their current use in the long run

Question 9

Subnormal profit?

Answer 9

profit less of normal profit

Question 10

Reasons why profit is important?

Answer 10

• finance for capital investment and research
• market entry (signals to other producers in market)
• signals about health of economy

Question 11

WHat is the profit max point?

Answer 11

MC=MR

Question 12

Key factors affecting profitability?

Answer 12

• degree of market competition
• rate of growth of market demand
• price elasticities
• changes in cost factors

Question 13

When is there supernormal profit in perfect competition?

Answer 13

in the short run