3.2

Short-Run Production Costs

AP Microeconomics

Fixed vs. Variable Costs

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Building the Cost Schedule

The Cost Formulas

Marginal Cost (MC)

Average Total Cost (ATC)

The Critical MC-ATC-AVC Relationship

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MC crosses AVC at AVC min, then crosses ATC at ATC min — always from below

The Pull-Up / Pull-Down Rule

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Total Cost Curves

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TC = TFC + TVC. The vertical gap between TC and TVC is always TFC ($60)

The Gap Between ATC and AVC

AP Exam Tips

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Common Mistakes

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Unit 3 topics

Unit 3 overview3.1The Production Function3.2Short-Run Production Costs3.3Long-Run Production Costs3.4Types of Profit3.5Profit Maximization3.6Firms' Short-Run Decisions to Produce and Long-Run Decisions to Enter or Exit3.7Perfect Competition3.8Long-Run Equilibrium and Efficiency in Perfect Competition
← Previous3.1 The Production FunctionNext →3.3 Long-Run Production Costs
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