Embedded Files
Key learning outcomes:
Key learning outcomes:
Rational producer behaviour—profit maximization (HL only)
Rational producer behaviour—profit maximization (HL only)
• Total revenue - Total costs (TR -TC)
• Total revenue - Total costs (TR -TC)
• Marginal cost = Marginal revenue (MC=MR)
• Marginal cost = Marginal revenue (MC=MR)
• Abnormal profit (AR > AC)*
• Abnormal profit (AR > AC)*
• Normal profit (AR = AC)*
• Normal profit (AR = AC)*
• Losses (AR < AC)*
• Losses (AR < AC)*
* AR = Average revenue, AC = Average cost
* AR = Average revenue, AC = Average cost
A review of Diminishing Marginal product/returns
Now draw the AP and MP curves
Now draw the AP and MP curves
Where does diminishing marginal returns set in?
Where does diminishing marginal returns set in?
Costs, revenue and profits.
Costs, revenue and profits.
Please make a copy of the sheet and then complete the tables:
Please make a copy of the sheet and then complete the tables:
AV Product mc.pptx
The concept of Profits
The concept of Profits
The Nature and Role of Profits.pptThe difference between accounting and Economic profits- an example
The difference between accounting and Economic profits- an example
Wages= $ 40, 000
Wages= $ 40, 000
Raw materials= $ 100,000
Raw materials= $ 100,000
Own the factory which they have been offered 90,000 by another firm to rent it from them
Own the factory which they have been offered 90,000 by another firm to rent it from them
Electricity costs= $ 40,000
Electricity costs= $ 40,000
Total revenue = $ 450,000
Total revenue = $ 450,000
Depreciation costs= $ 20,000
Depreciation costs= $ 20,000
Owner has given up their previous job to run the company. In her previous job she was paid $ 70,000
Owner has given up their previous job to run the company. In her previous job she was paid $ 70,000
The owner put $ 60,000 of their own money into the business. Present savings rates are 5% at the bank.
The owner put $ 60,000 of their own money into the business. Present savings rates are 5% at the bank.
Identify the accounting and economic profit for the firm
Identify the accounting and economic profit for the firm
Extension task:
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