Economics 3.3 Revenue, Costs and Profits 0.0 / 5 ? EconomicsThe company, revenue and costsA2/A-levelEdexcel Created by: tomstodd23Created on: 09-05-19 09:43 Fixed Costs Costs that do not vary with output 1 of 21 Variable Costs Costs increase as output increase 2 of 21 Opportunity Cost (Imputed) The value that could be generated if the resources were used elsewhere 3 of 21 Imputed Costs Examples Labour (salary), Capital (interest), Depreciation, Goodwill 4 of 21 Marginal Cost The cost of producing an extra unit of output 5 of 21 Marginal Cost Formula Change in Total Cost/ Change in Total Output 6 of 21 Law of Diminishing Marginal Product There will become a point where adding more labour reduces the productivity of the workers 7 of 21 Marginal Product The change in output resulting from employing one more unit of a particular input 8 of 21 Technical Economies of Scale Large businesses can invest in more efficient technology and can access division of labour 9 of 21 Managerial Economies of Scale Bigger firms have more staff under managers, meaning their workload is worth their pay 10 of 21 Marketing Economies of Scale Larger firms can spread marketing costs over a bigger output 11 of 21 Purchasing Economies of Scale Buying in bulk is better value for money. Better negotiating power 12 of 21 Financial Economies of Scale Larger firms are seen as more credit worthy and are more likely to get loans 13 of 21 Minimum Economic Scale (MES) The output level where the lowest cost production starts 14 of 21 External Economies of Scale Gained from a growth in the size of the industry the firm operates in 15 of 21 Diseconomies of Scale Examples Management problems usually, such as communication and co-ordination difficulties 16 of 21 Total Revenue The total money taken at any given output 17 of 21 Average Revenue The average revenue per unit. Total revenue/Quantity 18 of 21 Marginal Revenue The change in total revenue from selling an additional unit 19 of 21 Supernormal Profit Achieved when total revenue is greater than total costs (including opportunity/imputed costs) 20 of 21 Marginal Profit The additional profit from selling one extra unit 21 of 21
AQA Unit 3 Economics: Business Economics and the Distribution of Income 5.0 / 5 based on 1 rating Teacher recommended
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