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Firms, Costs, Revenue and Objective and Market Structure - Coggle Diagram
Firms, Costs, Revenue and Objective and Market Structure
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Perfect Competition
Definition: In a perfectly competitive market, there will be many producers and many consumers. The different firms compete to supply an identical product.
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Costs Of Production
Fixed costs do not vary with the level of output as the firm continues to pay for them once the production has started, no matter how much the firm produces or sells
Variable costs that change depending on factors such as demand, availability etc.
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Revenue
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Profit and Loss:
- If the total revenue of a firm exceeds the total cost, then the firm has made a profit.
- If the total revenue of a firm is less than the total cost, then the firm has incurred a loss.
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Break Even point: the point where the total revenue and the total cost meet is called the break even point.
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Pricing Strategies
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Price skimming (Charging high prices for new goods and consumers will be willing to try a new product)
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