Economics Pack 3

Danish IGCSE Econ Journey

Fixed cost

A cost that does not change when output changes (e.g., rent).

Variable cost

A cost that changes when output changes (e.g., raw materials).

Formula for Total Cost

$$\text{Total Cost} = \text{Fixed Costs} + \text{Variable Costs}$$

Total revenue

The money a firm receives from sales.

Formula for Total Revenue

$$\text{Total Revenue} = \text{Price} \times \text{Quantity Sold}$$

Formula for Profit

$$\text{Profit} = \text{Total Revenue} - \text{Total Cost}$$

Productivity

Output produced per worker.

Formula for Labour Productivity

$$\text{Labour Productivity} = \frac{\text{Total Output}}{\text{Number of Workers}}$$

Effect on profit if costs rise while revenue stays the same

Profit falls.