costs, revenues and profits

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  • Created by: amy
  • Created on: 19-05-13 12:36

Key Terms

  • PRICE- the amount paid to purchase one unit of a product
  • REVENUE- the money generated from the sale of goods
  • PROFIT- the amount of money that is left from revenue one total costs have been deducted
  • FIXED COSTS- those costs that do not change in direct proportion to the level of output. e.g. rent, salaries, marketing.
  • VARIABLE COSTS- those costs that vary in direct proportion to the level of output e.g. wages, stock, power
  • TOTAL COSTS= fixed costs + variable costs
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  • it is very difficult for new businesses to know what price to charge
  • price too high = people will not buy it
  • price too low = people might think that the product is inferior or they might swamp you with demand which you are unable to meet
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