Short run costs and Revenue
- Created by: Hamza2971
- Created on: 30-09-15 16:39
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- Costs And Revenue
- Marginal Cost
- The cost of increasing production by one extra unit
- Marginal Cost curve first fall then rise
- Marginal Revenue
- Extra revenue generated by selling one more game
- Profit Maximisation
- A firm maximises profit by producing up to the point where marginal cost = marginal revenue
- Marginal Cost
- Total Fixed Costs do not vary with the level of production
- Average fixed costs fall as output increases but total fixed costs remain constant
- Total Variable Costs are costs whose magnitude varies directly with the rate of production
- AVC are U shaped. First AVC falls then it starts to rise again
- Average total costs have a similar shape to AVC. Once the increase in AVC outweighs the fall AFC, the average total costs will start to rise.
- AVC are U shaped. First AVC falls then it starts to rise again
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