Firms, costs and profit

Chapter 3

What is the firm’s main goal ?

PROFIT FORMULA

REVENUE FORMULA

What are the possible trade-off of producers to influence elasticity ?

E _R FORMULA

What’s the link between Ep and Errp (the definition of Errp ) ?

What does it mean for the revenue when the demand is relatively elastic ?

What does it mean for the revenue when the demand is unit elastic ?

What does it mean for the revenue when the demand is relatively inelastic ?

What’s the principle of economic decision-making ?

ECONOMIC COST FORMULA

What is an opportunity cost ?

What is a sunk cost ?

ACCOUNTING PROFIT FORMULA

ECONOMIC PROFIT FORMULA

What are all the cost structure components ?

TOTAL COST FORMULA

MARGINAL COST FORMULA

AVERAGE COST FORMULA

AVERAGE FIXED COST FORMULA

AVERAGE VARIABLE COST FORMULA

What does it mean when AC goes up ? ( cost curves)

What does it mean when AC goes down ? ( cost curves)

What does it mean when AC = MC ? ( cost curves)

In the short run, what’s happening ? (Time factor)

In the long run, what’s happening ? (Time factor)

PROFIT MAXIMIZATION FORMULA 1

PROFIT MAXIMIZATION FORMULA 2

MR FORMULA

MC FORMULA

What can a firm do when MR > MC ? (profit)

What can a firm do when MR < MC ? (profit)