Revenues, Profits, and Objectives (Edexcel A-Level Economics A): Flashcards
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Practise the cards
10 cards from this deck
Revenue
Revenue
Money firm receives from selling goods/services
Total Revenue (TR) formula
Total Revenue (TR) formula
Price × Quantity Sold
Marginal Revenue (MR)
Marginal Revenue (MR)
Extra money from selling one more unit
MR curve vs AR curve
MR curve vs AR curve
MR falls twice as fast as AR; both start at same point
Normal profit
Normal profit
Minimum profit needed to keep firm operating in market
Supernormal profit
Supernormal profit
Profit earned above normal profit level
Profit maximisation rule
Profit maximisation rule
where MC cuts MR from below
Revenue maximisation occurs where
Revenue maximisation occurs where
(peak of total revenue curve)
Sales maximisation occurs where
Sales maximisation occurs where
including normal profit
Bounded rationality
Bounded rationality
Limited ability to decide rationally due to info constraints