1. AP MICROECONOMIC Practicing with Cost Curves

2. 2008 Audit Exam
50. c

3. 7.D

4. Calculating Costs Practice
Fill out the chart then
calculate:
ATC of 6 Units
AFC of 2 Units
AVC of 3 Units
ATC of 5 Units
AVC of 2 Units
AVC of 4 Units
AFC of 4 Units
ATC of 4 Units
Output
Variable
Cost
Fixed
Total
Marginal $0
$20 - 1
$12 2
$22 3
$27 4
$40 5
$60 6
$100
$20
$10 $9
$16
$11 $5 4

5. How much does the 10th unit costs?MC
$30 25 20 15 10 5
ATC
AVC
Calculate TC, VC, and FC
Total Cost=$200
Variable Cost=$150
Fixed Cost=$50
Notice that VC + FC = TC
AFC
Quantity 5

6. Per-Unit Costs (Average and Marginal)
At output Q, what area represents:
TC:
VC:
FC:

7. Calculate A-E TP VC FC TC MC AVC AFC ATC 100 - 1 10 110 2 16 116 6 8 A
100 - 1 10
110 2 16
116 6 8 A 58 3 21
121 5 B
33.3
40.3 4 26
126
6.5 25
31.5 30
130 D E 36
136 C
16.67
22.67 7 46
146
6.6
14.3
20.9

8. Why is the MC curve U-shaped?
The MC curve falls and then rises because of diminishing marginal returns.
Example:
Assume the fixed cost is $20 and the ONLY variable cost is the cost for each worker (Wage = $10)
Workers
Total Prod
Marg Prod
Total Cost
Marginal Cost -
$20 1 5
$30 2 13 8
$40 3 19 6
$50 4 23
$60 25
$70 26
$80

9. 2008 Audit Question 23
23. C

10. 2010 Question 18 B

11. 1. 2. E D 11

12. 2010 Question 19 D