Economics (McConnell) AP Edition, 19th Edition

Chapter 7: Businesses and the Costs of Production

The content of this chapter may be included on the AP* Microeconomics exam.

After reading this chapter, you should be able to:

1. Explain why economic costs include both explicit (revealed and expressed) costs and implicit (present but not obvious) costs.
2. Relate the law of diminishing returns to a firm's short-run production costs.
3. Describe the distinctions between fixed and variable costs and among total, average, and marginal costs.
4. Use economies of scale to link a firm's size and its average costs in the long run.

AP Chapter 07 Introduction (11.0K)