Costs and Revenues
- Created by: Niclamb123
- Created on: 31-03-16 11:53
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- Costs and revenues
- Short run and long run
- Short run - at least one fixed factor of production
- Long run - all factors of production are variable
- Costs
- Fixed costs - do not change with output
- Only in SR
- Variable costs - do change with output
- SR and LR
- Average costs
- Average fixed costs (AFC) - Fixed costs/Output
- Average variable costs - Variable costs/Output
- Marginal costs - change inTC/change in Output
- Fixed costs - do not change with output
- Efficiency
- Productive efficiency - lowest point on AC curve
- Allocative efficiency - P=MC
- Economies and diseconomies of scale
- Economies of scale
- Internal
- Financial economies
- Risk-bearing economies
- Technical economies
- Managerial economies
- Marketing economies
- Purchasing economies
- External
- Innovation
- New transport links
- SME share administrative and secretarial facilities
- Internal
- Diseconom-ies of scale
- Firm grows too large
- Moves beyond MES
- Breakdown of communication
- Breakdown of control
- Culture clash
- Lose cooperation and motivation
- Economies of scale
- Revenues
- Total revenue - TR=PxQ
- Average revenue - TR/Q
- Marginal revenue - Change in TR/Change in Q
- Short run and long run
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