revenue and costs

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  • Rev & cost
    • indiv' firms take market price
    • TR=P X Q
    • AR= TR/Q
    • MR= changeTR/changeQ
    • SR 1 factor fixed - output increased adding more variable factors
    • TFC - constant
    • AFC - TFC/Q
    • change in FC no effect on MC
    • AVC= TVC/Q
    • ATC= TC/Q
    • MC is change in TC
      • when MC lower than AC/VC producing next unit cheaper
    • Law of diminishing returns
      • MC ^ as Q ^
      • ^ in ATC - ^ AVC> fall in AFC
      • only in SR
      • output ^ till can no longer
      • TQ still ^
    • marginal product
      • extra output when 1 more factor added
    • AR for firm \ sloping curve
    • selling more less Rev - elasticity

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