# on 01-Jun-2017 (Thu)

#### Flashcard 1435774881036

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#cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit #study-session-4
Question
(Economic) profit = [...] minus [...]
Total revenue minus total economic cost; (TRTC)

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(Economic) profitTotal revenue minus total economic cost; (TR – TC)

#### Original toplevel document

3. ANALYSIS OF REVENUE, COSTS, AND PROFITS
umber of time periods). For example, average revenue is calculated by dividing total revenue by the number of items sold. To calculate a marginal term, take the change in the total and divide by the change in the quantity number. <span>Exhibit 3 shows a summary of the terminology and formulas pertaining to profit maximization, where profit is defined as total revenue minus total economic costs. Note that the definition of profit is the economic version, which recognizes that the implicit opportunity costs of equity capital, in addition to explicit accounting costs, are economic costs. The first main category consists of terms pertaining to the revenue side of the profit equation: total revenue, average revenue, and marginal revenue. Cost terms follow with an overview of the different types of costs—total, average, and marginal. Exhibit 3. Summary of Profit, Revenue, and Cost Terms Term Calculation Profit (Economic) profit Total revenue minus total economic cost; (TR – TC) Revenue Total revenue (TR) Price times quantity (P × Q), or the sum of individual units sold times their respective prices; ∑(P i × Q i ) Average revenue (AR) Total revenue divided by quantity; (TR ÷ Q) Marginal revenue (MR) Change in total revenue divided by change in quantity; (∆TR ÷ ∆Q) Costs Total fixed cost (TFC) Sum of all fixed expenses; here defined to include all opportunity costs Total variable cost (TVC) Sum of all variable expenses, or per unit variable cost times quantity; (per unit VC × Q) Total costs (TC) Total fixed cost plus total variable cost; (TFC + TVC) Average fixed cost (AFC) Total fixed cost divided by quantity; (TFC ÷ Q) Average variable cost (AVC) Total variable cost divided by quantity; (TVC ÷ Q) Average total cost (ATC) Total cost divided by quantity; (TC ÷ Q) or (AFC + AVC) Marginal cost (MC) Change in total cost divided by change in quantity; (∆TC ÷ ∆Q) 3.1. Profit Maximization In free markets—and even in regulated market economies—profit maximization tends to promote economic welfare and a hig

#### Flashcard 1450304998668

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Question
The change in total variable cost (which defines [...]) declines up to a certain output point and then increases as production approaches capacity limits.
marginal cost

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The change in total variable cost (which defines marginal cost) declines up to a certain output point and then increases as production approaches capacity limits.

#### Original toplevel document

Costs
of fixed assets locks the firm into a certain amount of fixed cost that is used to finance the physical capital base, technology, and other capital assets. When a firm downsizes, the last expense to be cut is usually fixed cost. <span>Total variable cost (TVC), which is the summation of all variable expenses, has a direct relationship with quantity. When quantity increases, total variable cost increases; total variable cost declines when quantity decreases. At zero production, total variable cost is always zero. Variable cost examples are payments for labor, raw materials, and supplies. As indicated above, total costs mirror total variable cost, with the difference being a constant fixed cost. The change in total variable cost (which defines marginal cost) declines up to a certain output point and then increases as production approaches capacity limits. In Exhibit 13, total variable cost increases with an increase in quantity. However, the change from 1 to 2 units is 25, calculated as (75 – 50); the change from 9 to 10 units is 350, calculated as (1,550 – 1,200). Another approach to calculating total variable cost is to determine the variable cost per unit of output and multiply this cost figure by the number of production units. Per unit variable cost is the cost of producing each unit exclusive of any fixed cost allocation to production units. One can assign variable cost individually to units or derive an average variable cost per unit. Whenever a firm initiates a downsizing, retrenchment, or defensive strategy, variable cost is the first to be considered for reduction given its variability with output. However, variable cost is reducible only so far because all firms have to maintain a minimum amount of labor and other variable resources to function effectively. <span><body><html>

#### Flashcard 1611254861068

Question
This Equity component includes items such as the minimum liability recognized for under-funded pension plans, market value changes in non-current investments, and the cumulative effect of foreign exchange rate changes.
Accumulated comprehensive income.

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Equity
. This is a company's own stock that has Already been fully issued and was outstanding; Been reacquired by the company; and Not been retired. It decreases stockholder's equity and total shares outstanding. <span>Accumulated comprehensive income. This includes items such as the minimum liability recognized for under-funded pension plans, market value changes in non-current investments, and the cumulative effect of foreign exchange rate changes. Refer to Reading 24 [Understanding the Income Statement] for details. Statement of Changes in Shareholders' Equity This statement reflects information about increases

#### Annotation 1611396156684

 American students lag behind their peers in other countries.

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#### Annotation 1611397991692

 Compared to many other countries, in terms of total instruction hours from primary through lower secondary education, the United States ranks among the highest

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#### Annotation 1611399564556

 Within the available time, can instruction and related learning activities be arranged in a manner that is optimal for learning? Put differ- ently, is student learning affected by the timing of academic activities?

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#### Annotation 1611401137420

 A number of theories may explain the benefit of spaced practice for long-term retention (Toppino & Gerbier, 2014). According to one prominent theory, repeating an item poten- tially reminds the learner of its prior occurrence, which prompts retrieving the previous presentation of the item, a process that enhances memory (e.g., Wahlheim, Maddox, & Jacoby, 2014; the next section elaborates on the effects of retrieving from memory). Massed repetition eliminates the retrieval process—there is no need to retrieve from memory because the same item was just presented. Another theory emphasizes the study/learning context (i.e., what surrounds an event, from the external environment to an individual’s mental state). With spaced repetitions, the context that gets encoded in memory with each presentation of an item is likely to be more variable (compared with massed repetitions that are close together in time and context); the variable con- texts that are stored in memory then serve as more effective cues for subsequent retrieval of the item (e.g., Glenberg, 1979). Deficient processing of massed repetitions is yet another theory. When a current item is the same as one that was just presented, the redundancy reduces attention (e.g., Magliero, 1983). The different theories are not mutually exclusive, and multiple mechanisms may act in concert to yield the memory advantage produced by spaced practice

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#### Annotation 1611404545292

 The importance of building a working knowledge of vocabulary in learners of English as a foreign language (EFL) cannot be overestimated. Because students are not immersed in the target language environment, diminishing the pos- sibilities for incidental vocabulary acquisition, vocabulary learning becomes a time- and effort-consuming task.

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#### Annotation 1611409001740

 CALL (Computer-Assisted Language Learning)