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3.2 Short-Run Production Costs

Part of Production, Cost, and the Perfect Competition Model in AP® Microeconomics. Read the opening section, then create a free account for the full interactive lesson, practice, and progress tracking.

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Key Concepts of Production Costs

  • Fixed Costs (FC): Costs that do not change with the level of output (e.g., rent for factory space).
  • Variable Costs (VC): Costs that change with the level of output (e.g., wages, raw materials).
  • Total Cost (TC): The sum of fixed and variable costs.
  • Average Total Cost (ATC): Total cost divided by the quantity of output.
  • Average Fixed Cost (AFC): Fixed cost per unit of output.
  • Average Variable Cost (AVC): Variable cost per unit of output.
  • Marginal Cost (MC): The additional cost of producing one more unit of output.

In this unit

7 lessons

  1. 3.1The Production FunctionPreview lesson
  2. 3.2Short-Run Production CostsThis lesson
  3. 3.3Long-Run Production CostsPreview lesson
  4. 3.4Types of ProfitPreview lesson
  5. 3.5Profit MaximizationPreview lesson
  6. 3.6Firms’ Short-Run Decisions to Produce and Long-Run Decisions to Enter or Exit a MarketPreview lesson
  7. 3.7Perfect CompetitionPreview lesson

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