Edexcel Economics 6. Business Behaviour

Description

Term

Total variable costs (TVC) ÷ output (Q)

Where a firm merges with or acquires a firm in an earlier stage of the production chain, such as a manufacturer and an extractor

The sum of all costs incurred in the production or purchasing of goods and services, calculated as cost per unit × output (Q) or total fixed costs (TFC) + total variable costs (TVC)

Diseconomies of scale that arise from the expansion of a firm

That which happens to average fixed costs (AFC) as output increases due to the same cost being dividing between a higher number of units

The factor of production that takes risks, organises production, and earns profit

A u-shaped curve that plots average costs against output

Profits that exceed normal profits

That which price elasticity of demand is when marginal revenue is negative

Internal economies of scale resulting from large firms being able to diversify and thus spread and mitigate risks across industries

Description

Term

That which firms may avoid due to the owner not desiring increased pressure or working hours, or to lose control to shareholders were the firm to become publicly limited

Economies of scale that arise from the expansion of a firm

The cost of producing an additional unit of output, calculated as change in total costs ÷ change in output (ΔTC ÷ ΔQ) or (total cost from producing x+1 units) - (total from selling x units)

When a firm divided into two or more parts or sells off part of its business, being either full or partial

A hump-shaped curve showing changes in total revenue against changes in output, at the peak of which demand is unit elastic and marginal revenue equals zero

Where a firm merges with or acquires a firm in a later stage of the production chain, such as a manufacturer and a retailer

Costs that vary with the level of output, calculated as total cost (TC) - fixed cost (FC)

Total cost (TC) ÷ output (Q)

That the position of which, short-run profit maximisation often depends on

That which firms may seek to achieve by reducing prices to stimulate demand or increasing prices while maintaining sales