3.3.2 - Revenue, costs and profits

Formulae to calculate and understand the relationship between:; total revenue; average revenue; marginal revenue.

Use a - formulae to calculate and understand the relationship between: • total revenue • to connect the rule to the data and decision in the question.

This matters because a - formulae to calculate and understand the relationship between: • total revenue • determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - formulae to calculate and understand the relationship between: • total revenue • to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: use the formula and units given in the question, show the substitution and interpret the result; the calculation alone is not the conclusion.

Price elasticity of demand and its relationship to revenue concepts, including calculations.

Use b - price elasticity of demand and its relationship to revenue concepts, including to connect the rule to the data and decision in the question.

This matters because b - price elasticity of demand and its relationship to revenue concepts, including determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply b - price elasticity of demand and its relationship to revenue concepts, including to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: b - Price elasticity of demand and its relationship to revenue concepts, including is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Derivation of short-run cost curves from the assumption of diminishing marginal productivity.

Use a - derivation of short-run cost curves from the assumption of diminishing marginal to connect the rule to the data and decision in the question.

This matters because a - derivation of short-run cost curves from the assumption of diminishing marginal determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - derivation of short-run cost curves from the assumption of diminishing marginal to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: a - Derivation of short-run cost curves from the assumption of diminishing marginal is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The law of diminishing returns.

Use b - law of diminishing returns to connect the rule to the data and decision in the question.

This matters because b - law of diminishing returns determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply b - law of diminishing returns to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: b - law of diminishing returns is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Formulae to calculate and understand the relationship between:; total cost; total fixed cost; total variable cost; average (total) cost; average fixed cost; average variable cost; marginal cost.

Use c - formulae to calculate and understand the relationship between: • total cost • total to connect the rule to the data and decision in the question.

This matters because c - formulae to calculate and understand the relationship between: • total cost • total determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply c - formulae to calculate and understand the relationship between: • total cost • total to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: use the formula and units given in the question, show the substitution and interpret the result; the calculation alone is not the conclusion.

The relationship between:; marginal product and marginal costs; average products and average cost; total product and total cost; short-run and long-run costs.

Use d - relationship between: • marginal product and marginal costs • average products and to connect the rule to the data and decision in the question.

This matters because d - relationship between: • marginal product and marginal costs • average products and determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply d - relationship between: • marginal product and marginal costs • average products and to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: d - relationship between: • marginal product and marginal costs • average products and is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The relationship between long-run cost curves and diseconomies of economies/diseconomies of scale. scale.

Use a - relationship between long-run cost curves and diseconomies of economies/diseconomies of to connect the rule to the data and decision in the question.

This matters because a - relationship between long-run cost curves and diseconomies of economies/diseconomies of determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - relationship between long-run cost curves and diseconomies of economies/diseconomies of to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: a - relationship between long-run cost curves and diseconomies of economies/diseconomies of is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Minimum efficient scale.

Use b - minimum efficient scale to connect the rule to the data and decision in the question.

This matters because b - minimum efficient scale determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply b - minimum efficient scale to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: b - Minimum efficient scale is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Distinction between internal/external economies of scale.

Use c - distinction between internal/external economies of scale to connect the rule to the data and decision in the question.

This matters because c - distinction between internal/external economies of scale determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply c - distinction between internal/external economies of scale to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: c - Distinction between internal/external economies of scale is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Sources of internal economies of scale:; financial; technical; managerial; marketing; purchasing; risk bearing.

Use d - sources of internal economies of scale: • financial • technical • managerial • to connect the rule to the data and decision in the question.

This matters because d - sources of internal economies of scale: • financial • technical • managerial • determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply d - sources of internal economies of scale: • financial • technical • managerial • to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: d - Sources of internal economies of scale: • financial • technical • managerial • is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Sources of external economies of scale:; availability of skilled labour; access to transport links; sharing knowledge.

Use e - sources of external economies of scale: • availability of skilled labour • access to to connect the rule to the data and decision in the question.

This matters because e - sources of external economies of scale: • availability of skilled labour • access to determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply e - sources of external economies of scale: • availability of skilled labour • access to to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: e - Sources of external economies of scale: • availability of skilled labour • access to is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Sources of diseconomies of scale:; communication problems; coordination problems; X-inefficiency.

Use f - sources of diseconomies of scale: • communication problems • coordination problems • to connect the rule to the data and decision in the question.

This matters because f - sources of diseconomies of scale: • communication problems • coordination problems • determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply f - sources of diseconomies of scale: • communication problems • coordination problems • to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: f - Sources of diseconomies of scale: • communication problems • coordination problems • is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The distinction between normal profit, supernormal profit and losses.

Use a - distinction between normal profit, supernormal profit and losses to connect the rule to the data and decision in the question.

This matters because a - distinction between normal profit, supernormal profit and losses determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - distinction between normal profit, supernormal profit and losses to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: a - distinction between normal profit, supernormal profit and losses is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Short-run and long-run shutdown points.

Use b - short-run and long-run shutdown points to connect the rule to the data and decision in the question.

This matters because b - short-run and long-run shutdown points determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply b - short-run and long-run shutdown points to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: b - Short-run and long-run shutdown points is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.