The Objectives Of Firms Flashcards
Total revenue
What the firm receives for he sale of its product = price x number sold
Profits
When total income or revenue for a firm is greater than total costs
Average revenue
Total revenue / number sold
Marginal revenue
The addition to total revenue from the production of one extra unit
Total profit
Total revenue - total costs
Normal profit
The amount require to keep a factor employed in its present activity in he long run
Profit maximisation
Where a firm chooses a level of output where marginal revenue = marginal costs (MR = MC)
Subnormal profit
A return above normal profit - a surplus payment
Sub-normal profit
Profit below normal which should lead took firms leaving the industry
Entrepreneur
Individual who organises the factors of production in order to make a profit
