The below mentioned article provides an overview on the Output Extension Path (OEP). To produce maximum output subject to a cost constraint or to produce a given output at a minimum cost, a firm will produce at that point where an isoquant is tangent to the isocost line, or where the slope of an isoquant is equal to the slope [...]
Let us learn about the relationship between Ac and AVC and between AC and MC. First, AC = AFC + AVC Second, AC = TC/Q AVC is obtained by dividing the total variable cost by output, i.e., AVC = TVC/Q. Thus, AVC is a part of AC, given AC = AFC + AVC. Furthermore, both the AVC and AC curves [...]
The following points highlight the three important types of revenue concepts. The types are: 1. Total Revenue Concept2. Average Revenue Concept 3. Marginal Revenue Concept. Revenue Concept: Type # 1.Total Revenue (TR): A firm's total revenue is the total receipt it gets from the sale of the product. Thus TR depends on the volume of sale. As sales change, TR [...]