revenue and costs
- Created by: ishah
- Created on: 24-10-13 10:30
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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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