Average revenue (AR) is the amount of money a business earns for every single unit of product it
Glossary Category: Economics
total revenue
Total revenue (TR) is the total amount of money a business earns from selling its goods or services.
law of diminishing returns
The law of diminishing returns, also known as the law of variable proportions, states that if you keep
normal profit
Normal profit is the minimum amount of profit a business needs to earn to stay in operation. It
marginal revenue
Marginal revenue (MR) is the extra income a business earns by selling one additional unit of a product.
economies of scale
Economies of scale occur when a company lowers its costs by increasing the amount of goods it produces.
marginal cost
Marginal cost (MC) is the extra cost a business pays to produce one additional unit of a product.
supernormal profit
Supernormal profit (also known as abnormal profit or economic profit) is the profit a business earns that goes
economic efficiency
Economic efficiency means that limited resources are used in the best possible way. This happens when it is
moral hazard
Moral hazard happens when a person or group takes more risks because they do not have to pay