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AP Microeconomics 3.2 Short Run Production Costs Questions

Calculate short-run cost measures from tables and explain how fixed inputs, productivity, input prices, and marginal returns shape cost curves.

Syllabus
Effective Fall 2022
Course
AP Microeconomics

Exam points

  • complete cost tables using TC = TFC + TVC and ATC = AFC + AVC relationships
  • calculate marginal and average costs from changes in cost, output and per-unit data
  • use MC intersections and relative positions to determine when AVC or ATC rises or falls
  • explain why diminishing marginal product produces an upward-sloping marginal cost curve
  • compare how fixed costs, variable input prices and productivity shift the relevant curves

Covered syllabus points

PRD-1.A—a. Define (using graphs where appropriate) key terms and concepts relating to production and cost. b. Explain (using…—Topic 3.2

Question 1

[Maximum number: 2]

The table provided shows the short-run production function for Lowen Feline, a profit-maximizing firm that produces cat food.

Table for Question 1 — AP Microeconomics

Lowen Feline sells as many bags of cat food as it wants at a market price of $ 10 per bag and hires as many workers as it wants at a market wage of $ 18.

Question (a)

(a)

Lowen Feline's fixed cost is $ 90. Calculate the average fixed cost if Lowen Feline hires 6 workers. Show your work.

[ 1 ]

Question (b)

(b)

Assume labor is the only variable input to Lowen Feline. Calculate the marginal cost if Lowen Feline increases output from 27 to 30 units. Show your work.

[ 1 ]
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