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...
Reasons for Growth & Reasons to Remain Small Many firms start small & will grow into large companies or even multi-national corporations (Amazon started in a garage) Reasons Why Firms Grow ...
Trade-offs Between Macroeconomic Objectives Policy decisions by governments often create a trade-off in the macroeconomic objectives Achieving one objective may come at the cost of worsening progre...
Supply-side Policies Supply-side policies aim to shift the long-run aggregate supply (LRAS) There are two categories of supply-side policies Interventionist and market-based Interventionist supply-...
