Cost and Revenue The subject of Economics deals in an out with cost and revenue calculations, thus it is a must we understand them in order to make our work easier.
Understanding of these concepts requires help form experts thus economics students sometimes need help in homework for the same, because it becomes difficult for them to do it on their own.
There are various types of costs, one needs to take note of, for assignment help:
Whenever a firm purchase or hires any the factor services, it has to incur money expenses, this is known as money cost.
Accounting cost refers to the money payments which the firm make to the owners of different factor services when he has purchased or hired any factor services which will be required in the production of a commodity.
The sum total of both explicit cost as ell as implicit cost, including normal profit, is know as economic cost.
The efforts and sacrifices which are make the owners of facto of production and which is being use to produce a commodity, is know as real Cost and Revenue.
The cost which the fixe factors have to incur is know as fix cost. For example, salary to permanent employee.
The cost which the variable factors have to incur is know as variable cost. It varies in short as well as long run. For example, cost of raw materials.
- Opportunity cost:
Opportunity cost is the next best alternative good and also is the amount of commodity which needs to be sacrifice in order to produce a specific quantity of another commodity.
- Total cost:
When a firm produces any given quantity of output and when it has to incur total obligations, then the cost is know as total cost.
It starts form starting point of total fixed cost which indicates that a firm has to incur total cost equal to fixed cost at zero level of output.
- Total fixed cost:
When a firm uses all the fix factors and incurs a total cost, then the cost is refer to as total fix cost. It is parallel to X-axis where Y-axis shows output.
It remains constant and does not change with change in any level of output. Total fix cost is also know as unavoidable cost s in the short-run, a firm has to incur certain amount of fix cost even at zero level of output
- Total variable cost:
When a firm uses all the variable factors and incurs a total cost,
then the cost is refer to as total variable cost. It is initially concave downward and eventually concave upward.
It increases with decreasing rate initially and eventually it increases at increasing rate.
The minimum point of average cost is know as optimum pint of production
because the cost is least, and the profits are at its maximum.
- Average fixed cost:
Average fix cost refers to the per unit cost which is incur on the fix factors.
It is a rectangular hyperbola and mathematically it is known as asymptotic because average fixed cost will approach both the axis but will never intersect it. Average fixed cost is continuously falling and falls throughout its length.
- Average variable cost:
variable cost decrease with increase in output, reaches it minimum point and then starts rising.
- Average total cost:
Average total cost refers to the per unit cost which is incur on both the factors that is,
fix as well as variable factors of production.
- Marginal cost:
It is U-shape because of the law of variable proportion.
It decreases initially with increase in output, reaches the minimum and then starts rising with increase in output. Marginal cost always intersects average cost and average variable cost at their lowest point.
When a product is sell a firm in a given period,
it receives a receipt, then that receipt is know as revenue.
Similarly, there are various types of revenues, one needs to take note of, for assignment help:
- Total revenue: The total amount of income which a firm receives when it has sols a give amount of its product, it is referred to as total revenue.
- Average revenue: Average revenue refers to the amount of revenue which is earn per unit when a product is sell.
- Marginal revenue: When one additional unit of a product is sell, it results in the addition to total revenue which is refer to as marginal revenue.
Thus these were a few basic points about cost and revenue that students must know for help in homework.