AP Microeconomics / Unit 3
Unit 3 · 22–25%
Production, Cost, and the Perfect Competition Model
Costs rise with output. In perfect competition, price is given and profit tells firms to stay or leave.
Topics
- Short-run production
- Fixed, variable, and marginal cost
- Average cost curves
- Profit maximization
- Perfect competition in short and long run
Lessons
Key terms
Original practice
Marlow Works questions. If this unit does not have its own items yet, you will see other questions from the same course.
A firm in a perfectly competitive market faces a market price of $16. Its marginal cost is MC = 4 + 2q. (a) Find the profit-maximizing output. (b) If ATC at that output is $12, find economic profit. (c) Explain why this outcome is not a long-run equilibrium if entry is free.
Original Marlow Works item — not a College Board question.
Take your time—this is practice, not a test.
Review checklist
- 01Separate the output rule (MR = MC) from the shutdown rule.
- 02Shade profit or loss using P and ATC.
- 03State what entry or exit does to the market supply curve.
Related resources
External links with reuse status. Marlow Works is independent and does not copy restricted exam or textbook material.
Official / link only
AP Microeconomics course page
Official six-unit framework for markets, costs, and market failure.
College Board · All rights reserved · accessed 2026-10-01
Open sourceCC BY — attribution required
Principles of Microeconomics: Scarcity and Social Provisioning
Open microeconomics background for scarcity, markets, and elasticity.
Open Textbook Library listing · CC BY · accessed 2026-10-01
Open sourceOfficial / link only
FRED economic data
Federal Reserve economic data. Terms vary by series; do not scrape or ingest.
Federal Reserve Bank of St. Louis · Varies by series · accessed 2026-10-01
Open source