Quizzes & Activities
Theory of the Firm - Key Calculations (Quizlet Activity)
- Level:
- AS, A-Level, IB
- Board:
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 22 Dec 2018
Here are some key short calculations useful when staying the theory of the firm for Year 2 microeconomics.
Key terms to revise
- Average Cost: Total cost divided by output
- Marginal Cost: Change in total cost / change in output
- Average Fixed Cost: Total fixed cost divided by output
- Average Variable Cost: Total variable cost divided by output
- Shut-down price: Where price = minimum average variable cost
- Profit maximisation: Where MR=MC
- Average revenue: Total revenue / output
- Marginal revenue: Change in total revenue / change in output
- Revenue maximisation: When marginal revenue = zero
- Sales maximisation (normal profits): Output where AC = AR
- Productive efficiency: Output where average cost is minimised
- Allocative efficiency: Output where price = marginal cost
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