Costs, revenue, objectives and markets

G3 Economics - syllabus K343, 2027

Calculate costs and revenue, explain what firms aim for, and compare competitive and monopoly markets.

• Fixed, variable and total costs

  Fixed costs do not change with output, variable costs do, and total cost is the two added together.

• Calculating average costs

  Average costs divide each total by output: ATC = TC / Q, AFC = FC / Q, AVC = VC / Q.

• Total revenue, average revenue and profit

  Total revenue is price x quantity sold; average revenue is revenue per unit; profit is revenue minus cost.

• Objectives of firms

  Firms may aim for survival, profit maximisation, growth or social welfare, and these aims can conflict.

• Competitive markets

  Many firms competing keeps prices down and pushes quality and choice up, though profits are limited.

• Monopoly markets

  A monopoly is a single seller protected by barriers to entry; it can charge higher prices but may fund research.

• Put it together: Choose the firm's objective

  A family-owned bubble tea chain with 15 outlets is deciding its main aim for the next three years. Compare how each objective affects different groups.

The K343 syllabus does not require diagrams or perfect and imperfect competition theory for competitive and monopoly markets.