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# GENERAL FORMULAS

Implicit cost : Costs that do not require money outlay Ex, time and effort Explicit cost = Costs that require money outlay Ex . wage, rent , lease
Law of supply: Firms increase output when price rice

Economic profit = Total revenue – Total cost(implicit + Explicit cost)
Accounting profit = Total revenue – Explicit cost

     

Total revenue: Firms return from sale of outputs Total cost : Amounts paid for inputs and making output Profit : TR - TC Production cost = Total opportunity cost (includes implicit and explicit costs) Production function =Relationship between quantities of inputs and outputs Cost curve = Relationship between Quantity produced and total cost

Production Costs

Fixed cost

Variable cost

Do not of quantity of output

Vary with quantity of output

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Profit = TR - TC

TC = Total cost

TC = TFC + TVC

TFC = Total fixed cost TVC = Total variable cost

ATC = Average total cost

ATC = AFC + AVC

AFC = Average fixed cost AVC = Average variable cost

ATC = TC/Q

TC = Total cost Q = Quantity

AVC = Average variable cost

AVC = VC/Q

VC = Variable cost Q = Quantity

AFC = Average fixed cost FC = Fixed cost

AFC = FC/Q

Q = Quantity

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