Costs, Revenues, Profits, and Objectives (Edexcel A-Level Economics A): Flashcards
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Short run (production period)
Short run (production period)
Period when at least one factor of production is fixed
Long run (production period)
Long run (production period)
Period when all factors of production can be varied
Law of diminishing marginal productivity
Law of diminishing marginal productivity
Extra output from variable factor eventually falls (fixed factor)
Total fixed costs (TFC)
Total fixed costs (TFC)
Costs that don't change with output level
Total cost formula
Total cost formula
TC = TFC + TVC
Marginal cost (MC)
Marginal cost (MC)
Cost of producing one additional unit of output
MC curve intersection with ATC & AVC
MC curve intersection with ATC & AVC
At their minimum points
Economies of scale
Economies of scale
Increase in scale leads to lower long-run average costs
Minimum efficient scale (MES)
Minimum efficient scale (MES)
Output level where LAC stops falling
External economies of scale
External economies of scale
Cost benefits from expansion of entire industry