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Presentation on Cost and Revenue


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Presentation on Cost and Revenue by Syed Zamin Ali Shah.

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Presentation on Cost and Revenue

  1. 1. Presented To: Mr. Abdur Rab. (Business Economics). Presented By Group Members: Hira Naeem. (7214). Maha Haider. (8532). Syed Zamin Ali Shah. (8914). Uzma Zaheer. (7220).
  2. 2. Cost: Amount of money spend to produce goods
  3. 3. Total Cost Total economic cost of production consisting of fixed and variables costs. Fixed Costs = Costs that don’t change based on production. example: rent. Variable Costs = Costs that change with rate of production example: cost of raw materials. Total Costs = Fixed Costs + Variable Costs.
  4. 4. TC, TVC, TFC Graphical Representation
  5. 5. Different types of Cost:  Economic Cost: The cost of production which take into account both Explicit cost and Implicit cost can be considered as Economic cost.  Economic cost = Explicit cost + Implicit cost.  Explicit Cost: Money payments that a firm makes to the outsiders who supply inputs. These are “out of pocket” costs e.g. salaries, price paid for raw materials etc. It is also known as accounting cost.  Implicit Cost: The cost of “self owned” resources which are employed by the firm and are non-expenditure costs e.g. salary of proprietor etc. It is also known as opportunity cost.
  6. 6. Cost Concepts:  Marginal Cost: The addition to cost associated with one additional unit of output.  MC = Change in TC/Change in Q.  Average Total Cost: Total Cost/Output, the cost per unit of production.  ATC = TC/Q.  Average Variable Cost: Total Variable Cost/Output, the average variable cost per unit of production.  AVC= TVC/Q  Average Fixed Cost: Total Fixed Cost/Output, the average fixed cost per unit of production.  AFC = TFC/Q.
  7. 7. Figure of Marginal Cost, Average Total Cost, Average Variable Cost, and Average Fixed Cost. P Q MC ATC AVC AFC
  8. 8. Revenue: Amount of money earned after selling the products.
  9. 9. Different types of Revenue:  Total Revenue: Total earnings from sales over a certain period of time.  TR = P*Q.  Average Revenue: Revenue generated by per unit sold.  AR = TR/Q.  Marginal Revenue: Change in revenue when output changes by one unit.  MR = Change in TR/Change in Q.
  10. 10. Figure of Total Revenue, Average Revenue and Marginal Revenue. P P TR P* AR P*=Marginal Revenue
  11. 11. Thank You So Much! Any Questions Please?