is the total output produced by a firm, measured in units, while     product is the average output produced per unit of     cost. This is calculated by     product divided by the     factors (V).

 Total  variable  Revenue  average  fixed  variable  total  product

  product is the additional     generated when one more     unit is added to the production process.  This could be an extra unit of labour or    .

 Average  Marginal  output  capital  fixed  variable 

In any business, costs which do not change     as output changes are called costs.  By contrast,     include costs that changes directly as the level of changes. e.g. raw materials and labour.

 costs  fixed  significantly  indirect  variable  direct  output  directly 

The short run in business includes a time period when at least one     is fixed.  This might be the office or factory that a business rents or a piece of machinery.  By contrast in the   run all costs are    .

variable  short  long  fixed  cost 

Total cost (   ) represents the total costs of     incurred by a firm. This is equal to fixed plus   costs.

 TC  AC  output  variable  production 

cost is the total cost of production divided by the number of     produced (Q).  It can also be expressed as   + AFC.

 units  AC  AVC  Average average  

      are calculated by total fixed costs /    or FC / Q.  As output     the AFC will fall as the     costs are divided by a larger and larger number of    .

 output  fixed  units  rises  Average  variable costs  costs  fixed costs 

Average variable costs are calculated by the             divided by output or VC / Q. 

 cost  total  average  marginal  variable  fixed 

          are the most difficult cost to classify as they are costs which do not fit easily into either fixed or     cost categories.

 costs  variable  Semi  indirect  Direct  variable 

      is the additional cost incurred when the firm produces     more unit or output.

Average  Marginal  one  cost 

      scale refers to the processes which result in         to scale.  Similarly, the term '  of scale' includes the processes which result in     returns to   .

 returns  diseconomies  scale  Economies  decreasing  of  advantages  disadvantages  Increased  

      arise from any benefit which comes from inside the company and are usually associated with increased     in the way that the business operates.   By contrast,     economies are economies of scale derived from factors    of the company itself.

 Internal  external  specialisation  outside  specialisation  inside  economies 

Total revenue (   ) is the total revenue produced by a firm, measured in monetary terms usually in $.  It is calculated by selling price or         multiplied by   .

 revenue  output  MR  price  TR  average 

Marginal (MR) is the additional generated when one good or service is added.  

price  revenue  cost  revenue 

The profit maximising level of output is calculated at where    =   , while the revenue maximising point is found where    = .

 0  MC  AR  MR  MR  demand 

  profit is found at where AR=AC,     profit at the point where AR > AC or and a business is making a     when AR < AC.

 abnormal  loss  Normal Abnormal  Implicit  

A firms point is where TR=TC where as the shut-down point in the        is equal to where     =   .   In the         the firm will shut down at the break-even point - where AR =     (including economic costs).

breakeven  AVC  long  shut down  AC  short  answer  run  run  AR