AP Economics – 10/16/19

I.  Bellwork

  • Page 551 Free Response #2

II. Objectives

  • Describe the various types of cost a firm faces: variable, fixed, and total costs
  • Explain how a firm’s costs generate marginal cost curves and average cost curves
  • Interpret and explain graphic models representing costs

III.  Discussion:  Firm Cost Module 55 – pgs 552-562

A. How Nintendo loses money on every Wii U

B.  Concepts

  • TC = FC + VC
  • MC = Chg TC / ChgQ
  • ATC = TotalCost / Quantity of Output
  • AFC = Fixed Cost ./ Quantity of Output
  • AVC = Variable Cost / Quantity of Output
  • Spreading Effect-p. 558
  • Diminishing Returns Effect-p. 558

C.  Videos:

  1. Costs of Production- Microeconomics 3.3 (Part 1)

  2. Cost Curves- Microeconomics 3.3 (Part 2)
  3. Short-Run Cost Curves (Part 3)- Micro Topic 3.2

IV. Classork

3.2 Cost of Production Practice

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