AP Unit III. Production Costs, Marginal Analysis, Profit Maximization, and the Law of Supply

EQ: Why do price and quantity desired have a direct relationship for a supplier?
Readings: Modules 6, 52, 53, 54, 55, 56

  • Production functions: short and long run
  • Short Run Analysis
    • Marginal product and diminishing returns
    • Cost analysis (MC, ATC, AVC)
    • Profit
      • Accounting versus economic profits
      • Normal profit
      • Profit maximization: MR=MC rule
  • Individual and market supply curves
  • Long-run
    • Variable inputs and economies of scale
    • Cost minimizing input combination and productive efficiency

Producer Theory
Fixed v. Variable Cost
Accounting v. Economic Profit
Cost Curves
Maximizing Profits

Grid sheet assignment