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Unit 3 Study Guide

ap micro

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810 views3 pages

Unit 3 Study Guide

ap micro

Uploaded by

高瑞韩
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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AP® Micro Unit 3: Production, Costs, & Perfect Competition

Topic 3.1- The Production Function


1. Calculate MP. Plot TP and MP on Graph
Number of Total Marginal
Workers Product Product
0 0
1 5
2 15
3 19
4 20
5 20
6 18
2. Define the Law of Diminishing Marginal
Returns

3. After which worker does diminishing


marginal returns set in? 4. Use the graph to identify the three stages of returns.
Topic 3.2- Short-Run Production Costs
1. What are fixed costs (FC)? 5. Draw and label MC, ATC, and AVC
Cost
2. What are variable costs (VC)?

3. What is total cost (TC)?

4. What is marginal cost (MC)?


Output
6. What is the equation for average 10. Fill in the blanks for a firm producing boxes of oranges.
total cost (ATC)?
Output Variable Total
AVC AFC ATC MC
(boxes) Cost Cost
7. What is the equation for average
variable cost (AVC)?
0 $0 $10 - - - -
1 $20
8. What is the equation for average 2 $15
fixed cost (AFC)? 3 $70 $3.3 $23
4 $2.5 $27 $40
9. Why does MC intersect ATC at
11. An increase in fixed cost will shift ____________ but not
ATC’s minimum?
________________.
12. An increase in variable cost will shift ____________ but not
________________.
Do not post online. © Copyright Jacob Clifford, Ultimate Review Packet 2020
Topic 3.3- Long-Run Production Costs
1. Define economies of scale. 4. Draw the long-run average total cost curve
and identify economies of scale.

2. Define constant returns to scale. Costs

3. Define diseconomies of scale.

Output
Topic 3.4- Types of Profit Topic 3.5- Profit Maximization
1. Explain the difference between Assume the price of the product is
accounting profit and economic profit constant at $100.
1. What is the profit-maximizing
rule?

2. What is the profit maximizing


quantity?
2. What is “normal profit”?
3. How much is the profit or loss?

Topic 3.6- Short-Run and Long-Run Decisions


1. What is the shut down rule? 2. Where is a firm’s short-run supply curve?

Topic 3.7- Perfect Competition


Use the graph to identify the following:
1. Profit maximizing quantity
2. Total revenue
3. Total cost
4. Economic profit
5. What will happen to the number of firms in
the market in the long run?

6. Assume the market reaches long run


equilibrium. What would be the price and
quantity?
7. In the long-run, would the firm earn
economic profit, accounting profit, neither, or
both?

8. If the price was $6, should the firm shut 9. List the characteristics of perfect competition
down in the short run?

Do not post online. © Copyright Jacob Clifford, Ultimate Review Packet 2020
Topic 3.7- Perfect Competition (continued)
10. Draw side-by-side graphs for a perfectly competitive market and firm with the firm making profit
Price Market Price Firm

Quantity Quantity
11. Draw a perfectly competitive market and a firm with the firm making a loss
Price Market Price Firm

Quantity Quantity
12. Show what happens in the long run 13. Show what happens in the long run

Market: Firm: Market: Firm:


Price___ Quantity ___ Price___ Quantity___ Price___ Quantity ___ Price___ Quantity___
14. Draw a perfectly competitive market and firm in the long run. 15. Explain the two types of
efficiency.

Do not post online. © Copyright Jacob Clifford, Ultimate Review Packet 2020

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