AP Microeconomics Practice Quiz: Long-Run Production Costs
Written by AP Content Team, Verified for 2026 AP Exams, Last updated: May 2026
Test your understanding with short quizzes. This quiz has 11 questions to check your progress.
Question 1 of 11
All Questions (11)
A) In the long run, only the amount of labor can be changed.
B) In the long run, firms can adjust all their inputs.
C) In the long run, at least one input is fixed, creating a fixed cost.
D) In the long run, technology is assumed to be fixed.
Correct Answer: B
The provided content explicitly states, 'In the long run, firms can adjust all their inputs, and as a result, all costs become variable.' This means no inputs are fixed.
A) long-run average total cost increases as output increases.
B) long-run average total cost decreases as output increases.
C) long-run average total cost remains constant as output increases.
D) long-run total cost decreases as output increases.
Correct Answer: B
According to the content, 'The long-run average total cost is characterized by economies of scale' when it is decreasing. This corresponds to the downward-sloping portion of the long-run average total cost curve.
A) Increasing returns to scale
B) Constant returns to scale
C) Decreasing returns to scale
D) Economies of scale
Correct Answer: C
The content states that the relationship between inputs and outputs in the long run is described by returns to scale. Decreasing returns to scale occur when an increase in all inputs leads to a proportionally smaller increase in output.
A) economies of scale.
B) constant returns to scale.
C) increasing returns to scale.
D) diseconomies of scale.
Correct Answer: D
The content explains that the long-run average total cost curve is characterized by different scales. Diseconomies of scale occur when long-run average total cost rises as output increases, which is represented by the upward-sloping part of the curve.
A) highest level of output a firm can produce in the long run.
B) output level where marginal cost equals marginal revenue.
C) lowest level of output at which a firm can minimize its long-run average total cost.
D) point where a firm begins to experience decreasing returns to scale.
Correct Answer: C
The content states that 'The minimum efficient scale plays a role in determining the concentration of firms in a market.' This scale is the point where the firm first achieves the lowest possible long-run average total cost, which corresponds to the end of economies of scale and the beginning of the efficient scale (constant returns to scale).
A) composed of many small, competitive firms.
B) a natural monopoly or an oligopoly.
C) experiencing constant returns to scale at all output levels.
D) unprofitable for any firm to enter.
Correct Answer: B
As stated in the provided text, 'The minimum efficient scale plays a role in determining the concentration of firms in a market and the market structure.' If the MES is large, only a few firms (or one) can produce at a low enough average cost to be competitive, leading to a concentrated market structure like an oligopoly or a natural monopoly.
A) economies of scale.
B) diseconomies of scale.
C) constant returns to scale.
D) decreasing marginal returns.
Correct Answer: C
The content describes the relationship between inputs and outputs as returns to scale. Constant returns to scale occur when a proportional increase in all inputs results in the same proportional increase in output. This is also referred to as the efficient scale on the LRATC curve.
A) diseconomies of scale.
B) economies of scale.
C) constant returns to scale.
D) the law of diminishing marginal returns.
Correct Answer: B
Increasing returns to scale means that as all inputs are increased, output increases by a larger proportion. This efficiency gain causes the long-run average total cost to fall as output expands. Therefore, increasing returns to scale is the underlying cause of economies of scale.
A) Diseconomies of scale
B) Constant returns to scale
C) Economies of scale
D) Decreasing returns to scale
Correct Answer: C
To determine the scale, we must calculate the long-run average total cost (LRATC) at each output level. At 50 widgets, LRATC = $250 / 50 = $5.00 per widget. At 100 widgets, LRATC = $400 / 100 = $4.00 per widget. Since the LRATC decreased as output increased, the firm is experiencing economies of scale.
A) Fixed costs only
B) Variable costs only
C) Both fixed and variable costs
D) Neither fixed nor variable costs
Correct Answer: B
The provided content clearly states: 'In the long run, firms can adjust all their inputs, and as a result, all costs become variable.' Therefore, there are no fixed costs in the long run.
A) The firm is experiencing significant economies of scale.
B) The firm is experiencing significant diseconomies of scale.
C) The firm is operating at its efficient scale.
D) The firm has maximized its total output.
Correct Answer: C
The minimum of the LRATC curve represents the most efficient level of production in the long run. According to the content, this flat portion of the curve is where the firm experiences constant returns to scale, also known as the 'efficient scale'.