Economic Rent
Economic rent refers to the income earned by a factor of production that exceeds the minimum amount necessary to keep it engaged in its current use.
Production Theory
Production theory looks at how businesses can most effectively combine labor and capital to achieve maximum efficiency. This can help firms increase output whilst also reducing output, thereby increasing profits.
Cost of Goods Sold
Cost of goods sold refers to the direct costs associated with producing or acquiring the goods that a company sells to generate revenue.
Average Fixed Cost
Table of Contents What is an Average Fixed Cost? Understanding Average Fixed Cost Formula Average Fixed Cost Curve Advantages Disadvantages Examples FAQs Average Fixed Cost: Definition, Formula & Examples Written by Paul Boyce Posted in Microeconomics > Production Theory Last Updated June 20, 2023 What is an Average Fixed Cost? In economics and business decision-making,
Mass Production: Definition, Examples, Pros & Cons
Mass production is the continuous production of standardized products, usually along an assembly line.
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Diseconomies of Scale: Definition, Types & Examples
It is an economic term that defines the trend for average costs to increase alongside output.
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Economies of Scale: Definition, Types & Examples
Economies of scale occur when a business benefits from the size of its operation. As a company gets bigger, it can benefit from a number of efficiencies.
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Law of Diminishing Marginal Returns: Definition & Examples
Diminishing Marginal Returns occur when increasing production further results in lower levels of output.
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Marginal Revenue: How to Calculate with Formula & Example
Marginal Revenue is the money a firm makes for each additional sale. So if a baker sells an additional loaf of bread for $2, then their marginal revenue is also $2.
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Sunk Cost: What it is, Examples & Fallacy
A sunk cost is a payment that has been made but cannot now be recovered.
Variable Cost: Definition, Formula & Examples
We can define a variable cost as a cost that changes based on the output of the business.