What you'll learn
How firms measure production costs and efficiency.
Key ideas
- Fixed vs variable costs; total and average cost.
- Productivity is output per input.
- Economies of scale lower unit costs; diseconomies raise them.
Exam tips
- Show working for cost calculations.
- Explain how scale affects unit costs.
Common mistakes
- Confusing fixed and variable costs.
- Mixing up economies and diseconomies of scale.