Firms and Production, Costs, Revenue and Objectives

Front

What is sales revenue?

Back

The sum of money received from the sale of a good or service, calculated by the formula: P * Q.

Front

What is total revenue?

Back

The amount payable to a firm from the sale of its goods and services.

Front

What is total cost?

Back

The sum of all fixed and variable costs of production.

Front

How is profit calculated?

Back

Profit is the difference between a firm's total revenues and its total costs, calculated using the formula: TR - TC.

Front

What are fixed costs?

Back

Costs that a firm has to pay irrespective of how much it produces or sells.

Front

What are variable costs?

Back

Costs that change as the level of output changes; the higher the level of production, the greater the total variable costs.

Front

What is average fixed cost?

Back

A fixed cost per unit of output.

Front

What is average total cost?

Back

The cost per unit of output, i.e., the total cost of making one product.

Front

What is average variable cost?

Back

The variable cost per unit of output.

Front

What are economies of scale?

Back

Cost-saving benefits of large-scale operations that reduce average costs of production.