BUSINESS ECONOMICS
1. oligopoly: a market structure in which a few large firms dominate a
market
2. total cost: total costs of producing a particular output
3. average cost: total cost / quantity of output
4. marginal cost: the additional cost of producing one extra unit of output
5. fixed cost: a cost that does not vary with output
6. variable cost: a cost that varies with output
7. average fixed cost: total fixed cost / quantity of output
8. average variable cost: total variable cost / quantity of output
9. examples of fixed costs (5): - rent
- interest on borrowed money
- some salaries
- advertising
- research and development
10.examples of variable costs (4): - raw materials
- electricity
- most salaries
- fuel
11. average fixed cost curve:
1/
,12.MC and AC curves: the marginal cost curve goes through rtex of
the
the ve average cost curve
13.AC and TC curves: start in the same place but total cost is higher
than the average cost from that point on wards
14.Economies of scale: Factors that cause a producer's average cost
per unit to fall as output rises
15.7 types of economies of scale:: 1) the spreading of fixed costs over a
larger output
2) technical economies
- ratios of length/area/volume
- invisibility of factors
3) division of labour/specialization
4) bulk purchasing
5) marketing economies
- advertising
2/
, - distribution
6) financial economies
7) managerial economies
16.diseconomies of scale: increase in average cost when the quantity of
output increases
17.3 reasons for diseconomies of scale: 1) problems with
cooperation and morale
2) increased demand for factors of production -> their price rises
3) the Law of Diminishing Returns
18.total output (TP): a firm's total output in a given period of time
19.average output (AP): total output / units of variable factor
20.marginal product (MP): the addition to total output resulting from the
addition of one extra unit of the variable factor
21.the law of diminishing returns: as units of variable factor (e.g.
workers) are added to a fixed factor (e.g. land), after a point first the
marginal and then the average product of the variable factor will
diminish
22.the long run: the period when all factors of production can be varied
23.the short run: at least one factor of production can be varied
24.the graph of long/short run: when a firm has to increase crease
their
or de output in a short run, the costs are above the long
term average cost
25.external economies of scale: economies of scale that arise from the
3/
1. oligopoly: a market structure in which a few large firms dominate a
market
2. total cost: total costs of producing a particular output
3. average cost: total cost / quantity of output
4. marginal cost: the additional cost of producing one extra unit of output
5. fixed cost: a cost that does not vary with output
6. variable cost: a cost that varies with output
7. average fixed cost: total fixed cost / quantity of output
8. average variable cost: total variable cost / quantity of output
9. examples of fixed costs (5): - rent
- interest on borrowed money
- some salaries
- advertising
- research and development
10.examples of variable costs (4): - raw materials
- electricity
- most salaries
- fuel
11. average fixed cost curve:
1/
,12.MC and AC curves: the marginal cost curve goes through rtex of
the
the ve average cost curve
13.AC and TC curves: start in the same place but total cost is higher
than the average cost from that point on wards
14.Economies of scale: Factors that cause a producer's average cost
per unit to fall as output rises
15.7 types of economies of scale:: 1) the spreading of fixed costs over a
larger output
2) technical economies
- ratios of length/area/volume
- invisibility of factors
3) division of labour/specialization
4) bulk purchasing
5) marketing economies
- advertising
2/
, - distribution
6) financial economies
7) managerial economies
16.diseconomies of scale: increase in average cost when the quantity of
output increases
17.3 reasons for diseconomies of scale: 1) problems with
cooperation and morale
2) increased demand for factors of production -> their price rises
3) the Law of Diminishing Returns
18.total output (TP): a firm's total output in a given period of time
19.average output (AP): total output / units of variable factor
20.marginal product (MP): the addition to total output resulting from the
addition of one extra unit of the variable factor
21.the law of diminishing returns: as units of variable factor (e.g.
workers) are added to a fixed factor (e.g. land), after a point first the
marginal and then the average product of the variable factor will
diminish
22.the long run: the period when all factors of production can be varied
23.the short run: at least one factor of production can be varied
24.the graph of long/short run: when a firm has to increase crease
their
or de output in a short run, the costs are above the long
term average cost
25.external economies of scale: economies of scale that arise from the
3/
