★ Must-know
📐 Formula - A company's profit is , where is total revenue and is total cost.
📌 In a competitive market, the market determines the selling price, whereas a monopolist is an exception and can choose its price.
Further detail
📐 Formula - A company's total revenue is , where is the selling price and is the quantity sold.
The attractiveness of a market for a good depends on its selling price, determined by supply and demand, and on production costs.
Say's Law is stated as the principle that everything produced is sold.
1. What is a company's primary economic objective?
2. A firm operates in a competitive market where individual firms do not determine the market price. How does this differ from a monopolist's pricing position?
3. In the short run, which description correctly identifies the variable production factor and the conditions for capital and technology?
What is a company's purpose?
To maximise profit.
How is a company's profit calculated?
, where is total revenue and is total cost.
Which production factor varies in the short run?
Labour.
Which production factors are assumed variable in the long run?
All production factors.
What does average productivity measure?
Output per unit of a production factor employed.
What is the formula for average labour productivity?
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