2 - the objective of firms Flashcards
when total income or revenue is greater than the total costs
profits
what the firm receives for the sale of it’s product
price x number sold
total revenue
total revenue ÷ number sold
average revenue
the addition to total revenue from the production of an extra product
marginal revenue
total revenue minus total costs
total profit
the amount required to keep a factor employed in its present activity in the long run
normal profit
where a firm chooses a level of output where marginal revenue equals marginal costs
profit maximisation
a return above normal profit- a surplus payment
supernormal profit
profit below normal which should lead to the firms leaving the industry
Sub-normal profit
individual who organises the factors of production in order to make a profit
entrepreneur
a firm owned by a group of shareholders whose shares can be traded on the London stock exchange
public limited company (plc)
a private enterprise firm incorporated with the register of companies
corporation
an individual elected by a company’s shareholders to set corporate policies
director
non-monetary benefits like an expensive car provided by the firm
perks
financial return from the ownership of shares in a firm
dividends
