1/13/17: Production Costs & Revenue

Production Costs & Revenue

• Total Revenue: Total amount of money a firm receives from selling goods & services.
• Total Revenue = P x Q
• Marginal Revenue: Additional income from selling an additional unit or a good.
• Fixed Cost: Cost that doesn’t change no matter how much of a good is produced.
•  Ex) Salaries, rent/mortgage, insurance
• Variable Cost: Cost that rises or falls depending upon how much is produced.

TFC  + TVC = TC

AFC + AVC = ATC

TFC / Q = AFC

TVC / Q = AVC

TC / Q = ATC

AFC  x Q = TC

AVC  x Q = TVC

Output = Quantity

Marginal Cost = New TC – Old TC

Online Resources: http://economics.fundamentalfinance.com/micro_atc_mc.php

http://www.tutor2u.net/economics/reference/short-run-costs-of-production