Average product, marginal

Average product, total

Total product, marginal

Total product, average 

Accounting costs include opportunity costs

Economic costs include fixed + variable costs

Accounting costs include implicit costs and explicit costs

Economic costs include implicit and explicit costs

Diminishing returns represents the fall in variable costs and economies of scale the fall in fixed costs

Diminishing returns shows the reduction in costs when output rises and economies of scale shows the rise in costs when output rises

Diminishing returns effects the long run and economies of scale the short run

Diminishing returns effect the short run and economies of scale the long run

Greater use of specialisation

Improved product quality

Fixed costs being divided by a larger number of units

Bulk buying

Disadvantages of being a larger company

The fall in revenue per unit (MR) when output rises

The communication problems that arise when a firm grows in size

The rise in AC when output rises

The breakeven point is equal to fixed costs / contribution

Breakeven is when the firm is making normal profit

The breakeven point is the same as the shut down point

All units to the right of the breakeven point are called the margin of safety or safe units

Where AC is at lowest point and where MR is at its maximum

Where TR is greater than TC and where MR is at its maximum

Where MC=MR and where MR=0

Where TR is maximised and where AC are at their lowest

To maximise sales

To maximise revenue

To provide a service

To maximise profit

When all costs are variable

Once the business has become established

Twelve months or longer

When all costs are fixed

Wages, stock and electricity which powers the machinery

Wages, marketing, raw materials

Wages of staff, electricity, stock

Maintenance of machinery, stock, raw materials

They are very small firms with little or no power to control prices

There is no brand loyalty

They are price takers not price makers

There are no barriers to entry or exit

Where MC=0

Where MC=MR 

Where MC=AR 

Where MC=AC

When the economies of scale mean that more than one firm in the industry would increase AC for both firms

When there is just one business in the industry

When there are economies of scale in the industry

An industry which is an essential public service

It depends on the economies of scale within the industry

Monopoly

Competitive market

Oligopoly

There are no barriers to entry or exit

They both sell identical or homogenous products

Highly elastic demand curves

Productive and allocative efficiency in the long run

Firms are price takers and not price makers

There are no barriers to entry or exit

The products are slightly differentiated giving some brand loyalty

Firms in monopolistic competition do not make normal profits in the long run

Dominant market share

Concentration ratio

CRx

Colluding oligopoly ratio

Dominant strategy

CRx

Concentration ratio

Colluding oligopoly ratio

Agreements between producers

High concentration ratios

Product differentiation

The difficulty of reducing their price in a competitive market

Wages, marketing, raw materials

Wages of staff, electricity for offices and marketing

Maintenance of machinery, stock, raw materials

Wages, stock and electricity powering the machinery