Micro 4.7

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How is total revenue calculated?
Price x quantity
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How is average revenue calculated?
Total revenue / quantity.
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What is marginal revenue?
The addition to a firm’s total revenue from selling an additional unit of output.
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How is marginal revenue calculated?
Change in total revenue / change in output.
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How is profit calculated?
Total revenue – total costs.
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How does profit affect entrepreneurs?
It creates an incentive for entrepreneurs to take a business risk.
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What is normal profit?
The minimum level of profit required to reward the entrepreneur for taking a risk and therefore to stay in a particular line of business.
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What is supernormal profit?
The profit over and above normal profit, sometimes referred to as abnormal or excess profit.
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Card 2

Front

How is average revenue calculated?

Back

Total revenue / quantity.

Card 3

Front

What is marginal revenue?

Back

Preview of the front of card 3

Card 4

Front

How is marginal revenue calculated?

Back

Preview of the front of card 4

Card 5

Front

How is profit calculated?

Back

Preview of the front of card 5
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