BUS 202 Lecture Notes - Lecture 16: Net Profit, Average Variable Cost, Marginal Revenue

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Mark 1115 Chapter 16 Vocab
ATC
See average total cost.
AVC
See average variable cost.
average total
cost (ATC)
Total costs divided by quantity of output. p. 523
average
variable cost
(AVC)
Total variable costs divided by quantity of output. p. 523
break-even
analysis
A method of determining what sales volume must be reached before total
revenue equals total costs. p. 526
demand
The quantity of a product that will be sold in the market at various prices for a
specified period. p. 516
elastic
demand
A situation in which consumer demand is sensitive to changes in price. p. 518
elasticity of
demand
Cosuers’ resposiveess or sesitivit to chages i price. p. 518
fixed cost
A cost that does not change as output is increased or decreased. p. 523
inelastic
demand
A situation in which an increase or a decrease in price will not significantly
affect demand for the product. p. 518
keystoning
The practice of setting prices by doubling the cost. p. 525
marginal cost
(MC)
The change in total costs associated with a one-unit change in output. p. 523
marginal
revenue
(MR)
The extra revenue associated with selling an extra unit of output, or the change
in total revenue with a one-unit change in output. p. 525
market share
A copa’s product sales as a percentage of total sales for that industry. p.
515
markup
pricing
The cost of buying the product from the producer plus amounts for profit and
for expenses not otherwise accounted for. p. 523
MC
See marginal cost.
MR
See marginal revenue.
prestige
pricing
Charging a high price to help promote a high-quality image. p. 523
price
That which is given up in an exchange to acquire a good or service. p. 512
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Document Summary

Avc average total cost (atc) average variable cost (avc) Total costs divided by quantity of output. p. 523. Total variable costs divided by quantity of output. p. 523 break-even analysis. A method of determining what sales volume must be reached before total revenue equals total costs. p. 526 demand. The quantity of a product that will be sold in the market at various prices for a specified period. p. 516 elastic demand elasticity of demand. A situation in which consumer demand is sensitive to changes in price. p. 518. Co(cid:374)su(cid:373)ers" respo(cid:374)sive(cid:374)ess or se(cid:374)sitivit(cid:455) to cha(cid:374)ges i(cid:374) price. p. 518 fixed cost. A cost that does not change as output is increased or decreased. p. 523 inelastic demand. A situation in which an increase or a decrease in price will not significantly affect demand for the product. p. 518 keystoning. The practice of setting prices by doubling the cost. p. 525 marginal cost (mc)

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