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Profit maximisation is the short or long run process where a firm determines the price and output level that will make them the greatest profit.

Helpful link to understanding profit and revenue:
https://www.economicshelp.org/microessays/costs/profit-revenue/

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The long-run average cost curve is formed from and creates an envelope for multiple short-run average cost curves. In the short run, at least one factor of production is fixed whereas, in the long run, all factors of production are variable. This means that a firm can increase output and operate at a lower cost in the long run as it can increase the factors of production that are fixed in the short run:

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Average revenue -  the revenue received from each unit of output sold (selling price). It is worked out by dividing total revenue by quantity sold.

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types of diseconomies of scales:
communication- as firms increase in size it may be harder and perhaps more expensive to communicate
coordination- larger firms may struggle to manage employees and delegation may be harder

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External economies of scale- occur due to an increase in the scale of production within the industry from which the firm operates causing cost to fall.
Examples:
As businesses grow within an area, specialist skills begin to develop.
Skilled labour in the area – local colleges may begin to run specialist courses.

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Internal economies of scale- As a business grows in scale, its costs will fall
Types of internal economies of scale:
Managerial economies- Large firms can hire specialist to oversee employees and ensure better efficiency.

Financial economies- Larger firms are usually rated to be more credit worthy and have easy access to credit with favourable borrowing rates

Commercial economies- Large firms can bulk buy from suppliers and reduce average costs per unit
Technical economies- Large-scale businesses can afford to invest in expensive and specialist capital machinery- potentially lowering costs per unit.
Risk bearing economies- Large firms are more likely to take risks with new products as they have more products to spread risk over
Marketing economies- A large firm can spread its advertising and marketing budget over a large output.

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Economies of Scale -Economies of scale is the cost advantage that arises with increased output of a product - occur when average cost per unit decreases with the increase of output being produced by a firm in the long run.
Diseconomies of scale - occur when there is an increase total average unit costs as scale of production increases.

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Variable costs are those costs that vary depending on a company's production volume; they rise as production increases and fall as production decreases. £

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Average total costs are the average fixed costs added with the average variable costs. ATC curve will be shown as a 'U' shape to reflect diminishing returns to the AVC curve.

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the four business objectives are profit maximisation, revenue maximisation, sales maximisation and satisficing

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Y2/IB 7) Objectives of Firms - Profit Max, Rev Max, Sales Max, Satisficing

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A2/IB 7) Objectives of Firms - Profit Max, Rev Max, Sales Max, Satisficing - What are the objectives of firms? Why might firms defer away from profit maximising? If so what will they try to do and why - this video includes the objectives of firms diagram.

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Shut down price: is the minimum price a business needs to justify remaining in the market in the short run

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Diminishing marginal returns is a short run concept, meaning it occurs when at least one factor of production is fixed. If a firm increases its input factors of production (most likely Labour) it will see an increase in output. If input factors continue to increase then output will of course continue to rise, however the firm will reach a point where an increase in input factors leads to a proportionately smaller increase in output. Past this point each input factor will offer a progressively smaller increase in output until an additional worker actually causes output to fall.
This occurs if say capital or land or limited, as when the number of workers increases they will soon get in the way of each other, hence this is a short run concept, as in the Long Run all factors of production are variable.

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Marginal revenue- the revenue gained by producing one additional unit of a product or service.

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Marginal Cost- the additional cost of producing one additional unit of a product or service.

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Fixed Costs - Fixed costs are costs that do not change with output. The cost remains the same no matter how many products are produced. E.g Land

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Theory of the firm key concepts. I want you to create a post and briefly define/outline the post. Try to link it to someone else's concept or example

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A Slideshow review the basic concepts of the Theory of The Firm.

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The law of increasing return states that for the first few factors of variable cost added, the increase in output will be greater than the increase in cost. As shown in the diagram to the left (linked) increasing returns is shown as the 'Most Productive'

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Interesting article on how modern medicine can have diminishing marginal returns.
https://well.blogs.nytimes.com/2014/03/20/the-diminishing-returns-of-modern-medicine/

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A firm should shutdown immediately if its average revenue falls below its average variable costs. However, it can still operate in the short run if average revenue is below average total costs.

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The total variable cost divided by the level of output. Where the price of the good or service intercepts This there's profit or loss