External economies of scale are cost savings that happen when an entire industry grows. These benefits are shared
Tag: firm theory
internal economies of scale
Internal economies of scale are cost savings that a company achieves as it grows larger and increases its
variable costs
Variable costs (VC) are business expenses that change in direct proportion to how much a company produces. As
fixed costs
Fixed costs (FC), also known as overhead costs, are expenses that do not change based on how much
marginal product
Marginal product (MP) is the extra output created by adding one more unit of a variable resource, such
total product
Total product (TP) refers to the complete amount of output a business produces by using a specific quantity
average cost
Average cost (AC) refers to the total cost divided by the quantity of output produced. It represents how
average revenue
Average revenue (AR) is the amount of money a business earns for every single unit of product it
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