Revenue and profit (OCR A-Level Economics): Flashcards

$TR = Price \times Quantity$

$AR = \frac{TR}{Quantity}$

Additional revenue from selling one more unit

$MR = \frac{\Delta TR}{\Delta Quantity}$

Equals the price of the good

Equals AR

Decreases as output increases

$Profit = TR - TC$

Minimum profit to keep firm in business

$TR = TC$ (explicit + implicit costs)

$TR > TC$ including normal profit

$Accounting\ Profit = TR - Explicit\ Costs$

Direct, out-of-pocket expenses