Characteristics of Perfect Competition The characteristics of perfect competition are as follows There are many buyers and sellers: due to the number of market participants sellers are price takers...
Types of Efficiency An Explanation of the Four Types of Efficiency Allocative Efficiency Occurs at the level of output where average revenue = marginal cost (AR = MC) At this point, resources are a...
Condition for Profit Maximisation To maximise profit firms should produce up to the level of output where marginal cost (MC) = marginal revenue (MR) Calculations To Demonstrate the Profit Maximisat...
Economies & Diseconomies of Scale As a firm increases its scale of output in the long-run, its long-run average total costs (LRATC) will initially decrease due to the benefits it receives These...
The Relationships Between Different Types of Costs Fixed costs are costs that do not change as the level of output changes These have to be paid whether output is zero or 5000 e.g. building rent, m...
Total, Average & Marginal Revenue Total revenue is the total value of all sales a firm incurs Average revenue is the overall revenue per unit Marginal revenue is the extra revenue received ...
Profit & Revenue Maximisation Profit Maximisation Most firms have the rational business objective of profit maximisation Profits benefit shareholders as they receive dividends & also increa...
Reasons for Demergers A demerger occurs when a firm sells off at least one of the businesses it owns, or splits itself into separate parts to create two or more firms Reasons For Demergers Reducing...
How Businesses Grow Business growth can be organic or external Organic growth (internal) is usually generated by gaining greater market share product diversification opening a new store internation...
