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All posts for the month February, 2021

By breakeven analysis we mean a determination of whether or not a firm can earn a positive (or zero) profit given its demand curve and its cost structure.  By shutdown analysis we me a determination of whether or not a firm should continue to operate in the short run and in the long run given […]

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CFA® Level I Economics Membership, CFA® Level I Financial Reporting and Analysis (FRA) Membership, CFA® Level I Membership

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This will be a short article, mercifully. Accounting profit is the difference between accounting revenue and accounting cost, while economic profit is the difference between economic revenue and economic cost.  (I know: not very exciting.  Hang in there; it gets better.) Accounting revenue and economic revenue are the same: total revenue.  The amount you receive […]

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CFA® Level I Economics Membership, CFA® Level I Financial Reporting and Analysis (FRA) Membership, CFA® Level I Membership

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Let’s get the terminology out of the way first. “Marginal” means “for the next unit”.  Thus: Marginal Revenue: The increase in revenue (sales) from producing and selling one additional unit of whatever it is you’re producing and selling Marginal Cost: The increase in cost (expenses) from producing and selling one additional unit of whatever it […]

This article is for members only.  You can become a member now by purchasing a

CFA® Level I Economics Membership, CFA® Level I Financial Reporting and Analysis (FRA) Membership, CFA® Level I Membership

This will give you access to this and all other articles at that membership level.