AP Micro Unit 3 Review

Short run marginal costs eventually increase because of the effects of:

• increasing marginal product
• diminishing marginal product
• increasing fixed costs
• diseconomies of scale

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

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

When marginal revenue equals marginal cost, a perfectly competitive firm is

• determining the price it will set.
• maximizing its revenues
• establishing its shutdown point
• maximizing its profit.

What causes marginal product to increase at an increasing rate in Stage 1? 

• increasing costs
• worker specialization
• underutilization
• fixed resources

The following graph illustrates

• The Law of Increasing Costs
• The Law of Demand
• Circular Flow Diagram of  Mixed Economy
• The Marginal Product of Labor

According to the graph, increasing marginal returns occur from 

• 0 to Labor₁
• Labor₁ to Labor₂
• 0 to Labor L₂
• After L₂

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