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Costs of Production (Terms (Fixed Costs, Variable Costs, Labour Hoarding,…
Costs of Production
Terms
Fixed Costs
Variable Costs
Labour Hoarding
Marginal Cost
Short Run
Long Run
Opportunity Cost
Social Cost
Social Benefit
Average Cost
Profits
Supernormal Profits
Normal Profit
Relationship between AC & MC
3 reasons plus diagram
Shape of SRAC
Better spread of fixed Costs
Specialisation
LDMR
Economies of scale
Internal
External
Diseconomies of scale
Internal
External
Shape of LRAC
Economies of scale
Diseconomies of scale
Revenue
Total Revenue
Marginal Revenue
Average Revenue
Rules for Profit Maximisation
MC = MR
MC rising faster than MR
AVC/All cost covered