Economics 7
- Created by: Gabrielle
- Created on: 29-12-13 18:04
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- Firms in Markets
- Types of Goods
- Excludable
- A person can be prevented from using it when they do not pay for it
- Rival
- One person’s use diminishes other people’s use
- Private
- Goods that are both excludable and rival
- e.g. ice cream, congested toll roads
- Goods that are both excludable and rival
- Public
- Neither excludable nor rival
- E.g. National defence, flood controls
- Neither excludable nor rival
- Common Resources
- Rival but not excludable
- E.g.Fish in the ocean, the environment
- Rival but not excludable
- Excludable
- Public and Private Sector
- Public
- Financed and controlled by the government
- Merit goods
- Market provision would not lead to an optimal production e.g. healthcare & education
- Private
- Business is owned, financed and run by private individuals
- Public
- Profit Maximisation
- Average revenue is the total revenue divided by the amount sold
- Marginal revenue is the change in total revenue from the sale of each additional unit of output
- The marginal cost is the change in total costs from the production of each additional unit
- A firm will maximize profits at an output where MR = MC
- Break Even
- Assumes all items are sold
- Price changes affect demand
- Revenue maximisation
- Cost minimisation
- Types of Goods
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