Average Total Costs:
The sum of the production costs divided by the number of units produced.
The total receipts from sales divided by the number of units sold, frequently employed in price theory in conjunction with marginal revenue.
When the profits exceed the total cost to make the product resulting in a profit, no breakeven = no profit.
Cost Benefit Analysis:
When monetary value is given is assigned to the costs and benefits so that the project can be determined fit to go ahead.
Multiplying an amount by a discount rate to compute its present value.
Diseconomies of Scale:
Increase in long-term average costs of production as the scale of operations increases beyond a certain level.
When there is a significant increase in assets over the amount of liabilities a company hold.
External Economies of Scale:
A form of increasing returns to scale which productivity and thus costs of individual firms depend on the output of their entire industry, rather than just their own company.
Internal Economies of Scale:
Related to the shift in average production costs for a business as it boosts overall production output and efficiency is attained.
Factors whose benefits and costs are not reflected in the market price of goods and services.
A period cost that remains more or less unchanged irrespective of the output level of sales revenue such as insurance, interest, rent and wages.
An input in the production of goods and services that does not change in the short term.
GDP (Gross Domestic Product):
The total market value of all final services produced in a country in a given year.
The changes to incremental costs that organisations are able to predict and account for.
The increase and decrease in the total cost of a production run for making one additional unit or item.