COSTS

• What are costs?

  expenses that must be met when setting up and running a business
• What are fixed costs?

  costs that do not vary with the level of output
• What are variable costs?

  costs that change when output levels change
• What is output?

  the direct results of a process, task or activity. such as the number of products produced or the number of services delivered
• What are total costs?

  fixed costs + variable costs
• What is average cost?

  the cost of producing a single unit of output
• How do you calculate average cost?

  average cost = total cost / quantity produced
• What is total revenue?

  money generated from the sale of output
• How do you calculate total revenue?

  total revenue = price x quantity
• How do you calculate profit?

  profit= total revenue - total cost