What this practice covers
These questions are drawn from past AP Economics papers and filtered to production, cost, and the perfect competition model. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.
Practice is free. You need an account only so your progress and your mistakes are still there next time.
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What examiners see students get wrong here
These are the errors that cost marks on production, cost, and the perfect competition model, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Drawing a downward-sloping demand curve for a perfectly competitive firm. It is horizontal.
- Using ATC instead of AVC for the shut-down decision.
- Saying zero economic profit means the firm makes no money.
- Ignoring implicit costs, and so reporting accounting profit as economic profit.
- Confusing diminishing returns (short run) with diseconomies of scale (long run).
- Drawing MC cutting ATC anywhere other than its minimum.
- Drawing AFC as U-shaped, it falls continuously.
- Putting AVC's minimum at the same output as ATC's. AVC turns first.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Production, Cost, and the Perfect Competition Model revision notes.