Quizzes & Activities
Revenues, Costs and Profits (Revision Quizlet Activity)
- A-Level, IB
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 10 Apr 2022
Here are twenty key terms covering revenues, costs and profits - there are quizlet activities and an A-Z glossary.
Average Cost (AC): Cost per unit of output = Total cost / output = TC/Q.
Average Fixed Cost (AFC): Fixed cost per unit of output = TFC/Q.
Average Revenue: Revenue per unit of output = TR/Q. Also known as price per unit.
Average Variable Cost: Variable cost per unit of output = TVC/Q.
Break-even output: When price = average total cost (P=AC). Normal profits made.
Economies of scale: Falling long run average cost as output increases in the long run.
Fixed costs: Costs that do not vary directly with the quantity of output produced
Long run: A period of time when all inputs are variable, and a business can change the scale of production
Marginal cost: The change in total costs from increasing output by one extra unit.
Marginal profit: The increase in profit when one more unit is sold or the difference between MR and MC
Marginal revenue: Revenue earned from selling the last unit of output
Normal profit: Normal profit is the minimum reward necessary to keep an entrepreneur in her present industry
Profit per Unit: Known as the profit margin = AR - ATC
Profit maximisation: Occurs when marginal cost = marginal revenue (MC=MR).
Retained profit: Profit kept by a business for its own use which is not paid back to shareholders or paid in tax to the government
Short run: A time period where at least one factor of production is in fixed supply
Shut down price: In the short run a firm will continue to produce so long as price per unit > or equal to average variable cost (P>AVC).
Sunk costs: Costs that cannot be recovered if a business decides to leave an industry
Supernormal profit: When its profit is above that required to keep resources in their present use when price > average cost (P>AC). Also called abnormal profit.
Variable costs: Costs that vary directly with output since more variable inputs are required to increase supply.