AP®︎ Microeconomics: Topic 3.3 Flashcards

Master key terms and definitions for Topic 3.3 of AP Microeconomics – Long-Run Production Costs to help you prep for quizzes and the AP exam.

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Term

Long Run

Definition

The time period when all inputs are variable and no costs are fixed.

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Long Run
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The time period when all inputs are variable and no costs are fixed.

PRD-1.APRD-1.A.9
Economies of Scale
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Per-unit cost falls as a firm increases output and expands its scale of production.

PRD-1.APRD-1.A.11
Constant Returns to Scale / Efficient Scale
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Per-unit cost stays constant as output rises, at the flat minimum portion of LRATC.

PRD-1.APRD-1.A.11
Diseconomies of Scale
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Per-unit cost rises as a firm increases output and becomes too large to manage efficiently.

PRD-1.APRD-1.A.11
Returns to Scale
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How output changes when all inputs change proportionally in the long run.

PRD-1.APRD-1.A.10
Long-Run Average Total Cost (LRATC)
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The lowest average total cost at each output, formed as the envelope of SRATC curves.

PRD-1.A
Minimum Efficient Scale (MES)
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The lowest output level that achieves minimum LRATC and helps determine market concentration.

PRD-1.APRD-1.A.12