(A Level) Production, costs, revenue and profit

Learning objectives

Distinguish fixed from variable factors, calculate total, average and marginal product, and explain the law of diminishing returns (variable proportions)

Calculate TFC, TVC, TC, AFC, AVC, ATC and MC and explain the shapes of short-run average and marginal cost curves

Explain returns to scale and the shape of the long-run average cost curve, including minimum efficient scale

Explain internal and external economies and diseconomies of scale and how they make long-run average cost fall or rise

Calculate total, average and marginal revenue, define normal, subnormal and supernormal profit, and calculate supernormal or subnormal profit

Explain why profit is maximised where MC = MR