Micro Economics

• Total Revenue (TR) is the amount received from selling goods or services, calculated by multiplying price per unit with quantity sold.
• Average variable cost (AVC) is the average cost of producing one more unit of output when all other inputs are held constant.
• Average Fixed Cost = Fixed Cost / Quantity Sold
• Average Total Cost = Average Fixed Cost + Average Variable Cost
• Average Fixed Cost (AFC): The average fixed cost is calculated as the ratio between total fixed costs and output level.
• Economies of scale occur when increasing the size of an operation leads to lower average costs due to increased efficiency.
• Average Total Cost (ATC) = Average Variable Cost + Average Fixed Cost
• Economies of Scale occur when increasing production leads to lower average costs due to spreading fixed costs over more units.
• Diseconomies of scale occur when increasing production leads to higher average costs due to diminishing returns on factors such as management, transport, and communication.
• Total Revenue (TR): TR is equal to price multiplied by quantity sold, or PQ.
• Profit Maximization: A firm maximizes profit where MR equals MC.