AP Microeconomics Flashcards: Short-Run Production Costs
Written by AP Content Team, Verified for 2026 AP Exams, Last updated: May 2026
Review key ideas with interactive flashcards. This set includes 14 cards to help you master important concepts.
Which short-run cost remains constant regardless of the output level?
Total fixed cost (TFC) remains constant at all output levels, including an output of zero.
Card 1 of 14
All Flashcards (14)
Which short-run cost remains constant regardless of the output level?
Total fixed cost (TFC) remains constant at all output levels, including an output of zero.
What is Average Variable Cost (AVC)?
Average variable cost is the total variable cost divided by the quantity of output produced (AVC = TVC/Q).
What is Average Total Cost (ATC)?
Average total cost is the total cost divided by the quantity of output produced (ATC = TC/Q).
How is Total Cost (TC) determined in the short run?
Total cost is determined by adding total fixed costs and total variable costs together (TC = TFC + TVC).
If the price of raw materials used in production increases, which cost curves will shift upward?
An increase in the cost of raw materials (a variable cost) will cause the Marginal Cost, Average Variable Cost, and Average Total Cost curves to shift upward.
How do specialization and the division of labor affect marginal costs?
Specialization and the division of labor initially reduce marginal costs for firms as workers become more efficient at their tasks.
What are Variable Costs (VC)?
Variable costs are costs that change directly with the level of output produced.
What are Fixed Costs (FC)?
Fixed costs are costs that do not change with the level of output produced. They must be paid even if output is zero.
What are the two main factors that can cause a firm's cost curves to shift?
A firm's cost curves can shift in response to changes in input costs and changes in productivity.
What is the relationship between diminishing marginal returns and the marginal cost curve?
Production functions with diminishing marginal returns cause the marginal cost curve to be upward-sloping.
What is Marginal Cost (MC)?
Marginal cost is the change in total cost that results from producing one additional unit of output.
A new technology increases worker productivity. How does this impact the firm's short-run cost curves?
An increase in productivity means more output can be produced with the same inputs, which will shift the MC, AVC, and ATC curves downward.
What is Average Fixed Cost (AFC)?
Average fixed cost is the total fixed cost divided by the quantity of output produced (AFC = TFC/Q).
A firm's landlord increases the monthly rent for its factory. Which cost curves are affected?
Since rent is a fixed cost, an increase will shift the Average Fixed Cost (AFC) and Average Total Cost (ATC) curves upward, but will not affect the Marginal Cost (MC) or Average Variable Cost (AVC) curves.