2.2.2 sales revenue and costs

• What is total revenue?

  amount of money business receives from selling output
• What is sales revenue?

  value of output sold in particular time period
• What is the formula for sales revenue?

  price x quantity
• What is sales volume?

  quantity of output sold in particular time period
• What is a fixed cost?

  cost that does not change as a result of change in output in short run
• What is meant by short run?

  time period where at least 1 FOP is fixed
• What is meant by long run?

  time period where all FOPs are variable
• What is a variable cost?

  cost that rises as output rises
• What is a semi-variable cost?

  cost that consists of both fixed & variable elements
• What is total cost?

  entire cost of producing a given level of output
• What is the formula for total cost (TC)?

  fixed cost (FC) + variable cost (VC)
• What is average cost? (AKA unit cost)

  cost of producing 1 unit
• What is the formula for average cost?

  total cost / output
• What is profit?

  difference between total costs & total revenue

  (negative =loss)
• What is the formula for profit?

  total revenue - total cost