AP Micro Unit 3 Cost of Production and Market Structures

Which allows increasing returns to occur with production?

• increasing costs
• worker specialization
• underutilization
• fixed resources

Tony opens up a hot chocolate stand for two hours.  He spends $10 for ingredients and sells $60 worth of tasty beverages.  In the same two hours, he could have provided Uber services (illegally because he isn't 18) and earned $40.  Tony's accounting profit is ____ and an economic profit of ____.

• $50, $10
• $90, $50
• $10, $50
• _{$50, $90}

Which description fits the total-cost curve when the marginal product of labor diminishes

• They are linear.
• The slope increases as output increases.
• The slope decreases as input increases.
• The curve is a parabolic inverse "u" that contains a peak.

The marginal cost curve typically does which of the following?

• Increases at a fixed rate.
• Decreases and eventually increases.
• Decreases at a decreasing rate.
• Increases and eventually decreases.

The term for costs that cannot be avoided in the short run

• Total Cost
• Fixed Cost
• Average Cost
• Variable Cost

Term for costs that change with production

• Fixed Cost
• Average Cost
• Variable Cost
• Marginal Cost

Extra cost of producing one more unit

• Marginal cost
• Variable Cost
• Fixed Cost
• Average Cost

ATC x ___=TC

• Variable Cost
• Quantity 
• Price
• None of the Above

What is the only curve that continues to fall as output increases?

• Average Fixed Cost
• Average Variable Cost
• Average Total Cost
• Marginal Cost

These costs are calculate by diving the cost by the output

• Fixed Cost
• Average Cost
• Total Cost
• Variable Cost