Costs, scale of production, and break-even analysis

fixed costs

costs that do not change with output

total fixed cost

all of the fixed costs of producing the total output

variable cost

costs that change in direct proportion to output

total variable cost

all of the variable costs of producing the total output

variable cost per unit

the variable cost of producing a single unit of output

total cost

all the variable and fixed costs of producing the total output

average total cost

the total cost of producing a single unit of output

economies of scale

the reduction in average costs as the scale of output increases

diseconomies of scale

an increase in average costs as the scale of output increases

revenue

the money gained from selling products

break-even

the level of output where revenye equsals total costs; the business is making neither profit nor loss

margin of safety

the difference between the current level of output of a business and the break-even level of output

quality

the characteristics and features of a product that satisfy the needs of customers