Summary: Cost and Revenue Together

This chapter has built two parallel toolkits — one for cost (TFC, TVC, TC and their averages/marginal, plus a brief look at the long run) and one for revenue (TR, AR, MR) — because a firm's output decisions in later chapters of the GSEB Std 11 Economics syllabus (market structure and price determination) rest on comparing the two directly: a profit-maximising firm keeps expanding output as long as the extra revenue from one more unit (MR) exceeds the extra cost of producing it (MC), and stops exactly where the two become equal.

A quick recap of the defining relationships to keep straight for the Gujarat Board exam:

• $TC = TFC + TVC$; $AC = AFC + AVC$.
• AFC falls continuously; AVC, AC and MC are all U-shaped in the short run.
• MC cuts both AVC and AC from below, exactly at each curve's minimum point.
• $TR = P × Q$; $AR = TR / Q = P$; $MR = ΔTR / ΔQ$.
• Under perfect competition: AR = MR = Price (one horizontal line).
• Under imperfect competition: MR lies below AR (except at the first unit) and falls faster; TR is maximum exactly where MR = 0. …