What you'll learn
How firms measure costs, revenue and profit.
Key ideas
- Fixed vs variable costs; total and average cost.
- Total revenue = price × quantity; profit = revenue − costs.
- Economies of scale lower unit costs as output grows.
Exam tips
- Show working for cost and profit calculations.
- Explain how scale reduces unit costs.
Common mistakes
- Confusing fixed and variable costs.
- Mixing up revenue and profit.