Short run costs and Revenue

HideShow resource information
View mindmap
  • 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
  • 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.

Comments

No comments have yet been made

Similar Economics resources:

See all Economics resources »See all The company, revenue and costs resources »