Free Response Practice: Cost Curves- Microeconomics Unit 3

Jacob Clifford provides a practice session on microeconomics, focusing on cost curves and their behaviors. The video covers identifying marginal, average total, and average variable costs, explaining the marginal cost curve's behavior due to specialization and diminishing returns, and discussing the average fixed cost. It concludes with an explanation of the short run supply curve and its relation to the law of supply.

What is the purpose of downloading the free response questions from the College Board website?

• To compare answers with classmates

• To use them as a reference for future exams

• To practice before watching the video

• To submit them for grading

Which cost curve is identified as the marginal cost in a perfectly competitive industry?

• Curve three

• Curve two

• Curve four

• Curve one

Why does the marginal cost curve initially decrease?

• Because of reduced variable costs

• Due to increased fixed costs

• Because of specialization

• Due to higher average total cost

What causes the marginal cost curve to eventually increase?

• Higher average variable cost

• Increased specialization

• Decreased fixed costs

• Law of diminishing marginal returns

What is the vertical distance between the average total cost and average variable cost curves?

• Marginal cost

• Variable cost

• Total cost

• Average fixed cost

Why does the average fixed cost decrease as output increases?

• Total costs remain constant

• Variable costs decrease with output

• Fixed costs increase with output

• Fixed costs are spread over a larger quantity

Which part of the marginal cost curve represents the short-run supply curve?

• Above the average variable cost

• Above the average total cost

• The entire curve

• Below the average variable cost