• 66 questions

AP Micro Unit 3 Practice Test

Unofficial practice for Unit 3 of AP Microeconomics: Production, Cost, and the Perfect Competition Model.

What does a production function describe?

Pick an answer, then press Check answer. Then you see Correct or Not quite, with the reason. Keys: A to D pick, Enter checks.

Print covers the next 25 questions. Share this set copies a link to the same questions in the same order.

More options

Unofficial practice questions, not affiliated with the College Board. Bank checked October 14, 2026.

Next step Next unit: AP Micro imperfect competitionUnit 2: AP Micro supply and demand

All 66 questions

Topic 3.1: The production function 8

  • A bakery's total product is 10 loaves with one worker, 24 with two, 33 with three and 38 with four. What is the marginal product of the third worker? College Board, AP Microeconomics Course and Exam Description, topic 3.1, essential knowledge PRD-1.A.2
  • A fifth worker joins a crowded kitchen and total product falls from 38 loaves to 36. What is that worker's marginal product? College Board, AP Microeconomics Course and Exam Description, topic 3.1, essential knowledge PRD-1.A.2
  • Four workers average 10 units each. A fifth worker adds 15 units. What happens to average product? College Board, AP Microeconomics Course and Exam Description, topic 3.1, essential knowledge PRD-1.A.2
  • Four workers together produce 38 loaves. What is the average product of labor? College Board, AP Microeconomics Course and Exam Description, topic 3.1, essential knowledge PRD-1.A.2
  • Marginal product is positive but smaller with each added worker. What is happening to total product? College Board, AP Microeconomics Course and Exam Description, topic 3.1, essential knowledge PRD-1.A.2
  • Successive workers add 10, 14, 9 and 5 loaves to a bakery's output. With which worker do diminishing marginal returns set in? College Board, AP Microeconomics Course and Exam Description, topic 3.1, essential knowledge PRD-1.A.3
  • Under what condition do diminishing marginal returns occur? College Board, AP Microeconomics Course and Exam Description, topic 3.1, essential knowledge PRD-1.A.3
  • What does a production function describe? College Board, AP Microeconomics Course and Exam Description, topic 3.1, essential knowledge PRD-1.A.1
Show all 66 questions (58 more)

Topic 3.2: Short-run production costs 14

  • A firm has total fixed cost of $200 and total variable cost of $450. What is its total cost? College Board, AP Microeconomics Course and Exam Description, topic 3.2, essential knowledge PRD-1.A.4
  • A firm produces 20 units at a total cost of $600. Its total fixed cost is $200. What is its average variable cost? College Board, AP Microeconomics Course and Exam Description, topic 3.2, essential knowledge PRD-1.A.4
  • A firm's monthly rent, a fixed cost, goes up. Which cost curves shift? College Board, AP Microeconomics Course and Exam Description, topic 3.2, essential knowledge PRD-1.A.8
  • A print shop pays $2,000 a month in rent whether it prints one poster or ten thousand. What kind of cost is the rent? College Board, AP Microeconomics Course and Exam Description, topic 3.2, essential knowledge PRD-1.A.5
  • At 50 units a firm's average fixed cost is $4 and its average variable cost is $9. What is its total cost? College Board, AP Microeconomics Course and Exam Description, topic 3.2, essential knowledge PRD-1.A.4
  • At low levels of output, hiring more workers lets each one specialize in a task. What does that do to marginal cost? College Board, AP Microeconomics Course and Exam Description, topic 3.2, essential knowledge PRD-1.A.7
  • The hourly wage of a firm's workers rises, and labor is its only variable input. Which cost curves shift up? College Board, AP Microeconomics Course and Exam Description, topic 3.2, essential knowledge PRD-1.A.8
  • In the short run a firm produces nothing this month. What is its total cost? College Board, AP Microeconomics Course and Exam Description, topic 3.2, essential knowledge PRD-1.A.5
  • New software lets the same workers produce more per hour. What happens to the firm's cost curves? College Board, AP Microeconomics Course and Exam Description, topic 3.2, essential knowledge PRD-1.A.8
  • Ten units cost $80 in total. The eleventh unit has a marginal cost of $3. What happens to average total cost? College Board, AP Microeconomics Course and Exam Description, topic 3.2, essential knowledge PRD-1.A.5
  • Total cost rises from $500 to $560 when output goes from 10 units to 11. What is the marginal cost of the eleventh unit? College Board, AP Microeconomics Course and Exam Description, topic 3.2, essential knowledge PRD-1.A.5
  • Total fixed cost is $300. What happens to average fixed cost as output rises from 10 units to 30? College Board, AP Microeconomics Course and Exam Description, topic 3.2, essential knowledge PRD-1.A.5
  • Where does the marginal cost curve cross the average total cost curve? College Board, AP Microeconomics Course and Exam Description, topic 3.2, essential knowledge PRD-1.A.5; fact read in Wikipedia, "Cost curve"
  • Why does the marginal cost curve slope upward? College Board, AP Microeconomics Course and Exam Description, topic 3.2, essential knowledge PRD-1.A.6

Topic 3.3: Long-run production costs 8

  • A firm becomes so large that its long-run average total cost starts to rise. What is this called? College Board, AP Microeconomics Course and Exam Description, topic 3.3, essential knowledge PRD-1.A.11
  • A firm doubles every input and its output rises by 60%. What does the firm have? College Board, AP Microeconomics Course and Exam Description, topic 3.3, essential knowledge PRD-1.A.10
  • A firm doubles every input and its output triples. What does the firm have? College Board, AP Microeconomics Course and Exam Description, topic 3.3, essential knowledge PRD-1.A.10
  • A firm holds a one-year lease on its only factory and decides to add a night shift. What kind of decision is that? College Board, AP Microeconomics Course and Exam Description, topic 3.3, essential knowledge PRD-1.A.9
  • In one industry a firm must be very large before its long-run average cost reaches its minimum. What does that suggest about the market? College Board, AP Microeconomics Course and Exam Description, topic 3.3, essential knowledge PRD-1.A.12
  • Long-run average total cost falls as a firm grows from a small plant to a larger one. What is this called? College Board, AP Microeconomics Course and Exam Description, topic 3.3, essential knowledge PRD-1.A.11
  • Over a wide range of output a firm's long-run average total cost is flat. What does that range show? College Board, AP Microeconomics Course and Exam Description, topic 3.3, essential knowledge PRD-1.A.11
  • What sets the long run apart from the short run? College Board, AP Microeconomics Course and Exam Description, topic 3.3, essential knowledge PRD-1.A.9

Topic 3.4: Types of profit 7

  • A firm earns zero economic profit. What is true of it? College Board, AP Microeconomics Course and Exam Description, topic 3.4, essential knowledge CBA-2.C.2
  • A firm reports an accounting profit of $70,000. Its implicit costs are $90,000. What is its economic profit? College Board, AP Microeconomics Course and Exam Description, topic 3.4, essential knowledge CBA-2.C.2
  • A shop takes in $200,000 and pays $120,000 in explicit costs. Its owner's implicit costs, a salary and interest given up, are $60,000. What is the economic profit? College Board, AP Microeconomics Course and Exam Description, topic 3.4, essential knowledge CBA-2.C.2
  • A shop takes in $200,000. It pays $120,000 in wages, rent and supplies. The owner gave up a $50,000 salary and $10,000 of interest to run it. What is the accounting profit? College Board, AP Microeconomics Course and Exam Description, topic 3.4, essential knowledge CBA-2.C.2
  • An owner puts $100,000 of savings into a business. The same money would earn 5% a year in bonds. What yearly implicit cost does that create? College Board, AP Microeconomics Course and Exam Description, topic 3.4, essential knowledge CBA-2.C.2
  • Which measure of profit do firms respond to when they decide whether to enter or leave a market? College Board, AP Microeconomics Course and Exam Description, topic 3.4, essential knowledge CBA-2.C.1
  • Which of these is an implicit cost of running a business? College Board, AP Microeconomics Course and Exam Description, topic 3.4, essential knowledge CBA-2.C.2

Topic 3.5: Profit maximization 6

  • A firm is producing where its average total cost is lowest, and marginal revenue is still above marginal cost there. What is true? College Board, AP Microeconomics Course and Exam Description, topic 3.5, essential knowledge CBA-2.D.1
  • A firm sells 3 units at $10 each. Their marginal costs are $4, $6 and $9, and its fixed cost is $5. What is its profit? College Board, AP Microeconomics Course and Exam Description, topic 3.5, essential knowledge CBA-2.D.1
  • A firm sells each unit for $10. The marginal costs of its first five units are $4, $6, $9, $12 and $16. How many units maximize profit? College Board, AP Microeconomics Course and Exam Description, topic 3.5, essential knowledge CBA-2.D.1
  • At a firm's current output, marginal revenue is $5 and marginal cost is $8. What should the firm do to raise its profit? College Board, AP Microeconomics Course and Exam Description, topic 3.5, essential knowledge CBA-2.D.1
  • At a firm's current output, marginal revenue is $9 and marginal cost is $6. What should the firm do to raise its profit? College Board, AP Microeconomics Course and Exam Description, topic 3.5, essential knowledge CBA-2.D.1
  • What is the profit-maximizing rule for a firm? College Board, AP Microeconomics Course and Exam Description, topic 3.5, essential knowledge CBA-2.D.1

Topic 3.6: Short-run decisions to produce and long-run decisions to enter or exit 9

  • A firm has total revenue of $500, total variable cost of $650 and total fixed cost of $300. What should it do in the short run? College Board, AP Microeconomics Course and Exam Description, topic 3.6, essential knowledge PRD-2.A.1
  • A firm has total revenue of $900, total variable cost of $700 and total fixed cost of $400. What is its loss if it operates, and if it shuts down? College Board, AP Microeconomics Course and Exam Description, topic 3.6, essential knowledge PRD-2.A.1
  • A pottery studio sells mugs at the market price of $7. At its best output each mug carries $5 of variable cost and $9 of total cost. What should the studio do this month? College Board, AP Microeconomics Course and Exam Description, topic 3.6, essential knowledge PRD-2.A.1
  • Farms in a competitive market expect their economic losses to go on. What do some of them do once their fixed inputs can be changed? College Board, AP Microeconomics Course and Exam Description, topic 3.6, essential knowledge PRD-2.A.2
  • Firms in a market with no barriers to entry are earning economic profits. What happens in the long run? College Board, AP Microeconomics Course and Exam Description, topic 3.6, essential knowledge PRD-2.A.2
  • How does shutting down differ from exiting a market? College Board, AP Microeconomics Course and Exam Description, topic 3.6, essential knowledge PRD-2.A.1
  • How much does a firm lose in a month when it shuts down in the short run? College Board, AP Microeconomics Course and Exam Description, topic 3.2, essential knowledge PRD-1.A.5
  • In the short run, when should a firm keep producing even though it is losing money? College Board, AP Microeconomics Course and Exam Description, topic 3.6, essential knowledge PRD-2.A.1
  • The market price is $4 and the lowest average variable cost a firm can reach is $5. What should the firm do in the short run? College Board, AP Microeconomics Course and Exam Description, topic 3.6, essential knowledge PRD-2.A.1

Topic 3.7: Perfect competition 14

  • Demand rises in a perfectly competitive market that began in long-run equilibrium. What happens in the short run? College Board, AP Microeconomics Course and Exam Description, topic 3.7, essential knowledge PRD-3.A.6
  • Firms in a perfectly competitive market are earning short-run economic profits. How does the market move toward long-run equilibrium? College Board, AP Microeconomics Course and Exam Description, topic 3.7, essential knowledge PRD-3.A.6
  • Firms in a perfectly competitive market are taking short-run economic losses. How does the market move toward long-run equilibrium? College Board, AP Microeconomics Course and Exam Description, topic 3.7, essential knowledge PRD-3.A.6
  • Firms in long-run competitive equilibrium earn zero economic profit. Why do they stay in the market? College Board, AP Microeconomics Course and Exam Description, topic 3.4, essential knowledge CBA-2.C.2
  • In a constant cost industry, demand rises and new firms enter. Where does the long-run price settle? College Board, AP Microeconomics Course and Exam Description, topic 3.7, essential knowledge PRD-3.A.8
  • In an increasing cost industry, demand rises and new firms enter. Where does the long-run price settle? College Board, AP Microeconomics Course and Exam Description, topic 3.7, essential knowledge PRD-3.A.8
  • The market price is $10. At 40 units a competitive firm's marginal cost is $10, its average total cost is $13 and its average variable cost is $8. What is its short-run result? College Board, AP Microeconomics Course and Exam Description, topic 3.6, essential knowledge PRD-2.A.1
  • The market price is $12. A competitive firm's marginal cost equals $12 at 50 units, where its average total cost is $9. What is its economic profit? College Board, AP Microeconomics Course and Exam Description, topic 3.7, essential knowledge PRD-3.A.4
  • The market price of wheat is $6 a bushel. What is the marginal revenue of one more bushel for a perfectly competitive farm? College Board, AP Microeconomics Course and Exam Description, topic 3.7, essential knowledge PRD-3.A.4
  • What condition shows allocative efficiency in a competitive market? College Board, AP Microeconomics Course and Exam Description, topic 3.7, essential knowledge PRD-3.A.5
  • What does productive efficiency mean for a firm in long-run competitive equilibrium? College Board, AP Microeconomics Course and Exam Description, topic 3.7, essential knowledge PRD-3.A.7
  • What does the demand curve facing a single perfectly competitive firm look like? College Board, AP Microeconomics Course and Exam Description, topic 3.7, essential knowledge PRD-3.A.3
  • Which describes a firm in a perfectly competitive market? College Board, AP Microeconomics Course and Exam Description, topic 3.7, essential knowledge PRD-3.A.1
  • Which set of conditions holds for each firm in long-run perfectly competitive equilibrium? College Board, AP Microeconomics Course and Exam Description, topic 3.7, essential knowledge PRD-3.A.7

How this list was compiled: Our own questions, written to Unit 3 (Production, Cost, and the Perfect Competition Model) of the College Board's AP Microeconomics Course and Exam Description, effective fall 2026, https://apcentral.collegeboard.org/media/pdf/ap-microeconomics-course-and-exam-description.pdf, read 2026-10-14: topics 3.1 to 3.7. The rule behind each answer was read on 2026-10-14 in the essential knowledge statement of the course description named under the question; where the marginal cost curve crosses the average curves was read in the Wikipedia article named. Every calculated answer is worked from the numbers the question prints and was worked out a second time. Licence: Own work. Short quotations from the public documents named under each question.

How it works

This AP Micro Unit 3 practice test has 66 questions of our own on production, cost and the perfect competition model. The practice is unofficial, and the College Board, which owns AP, did not make or endorse it.

Read the full guide

What Unit 3 covers

The College Board's course description, effective fall 2026 and read October 14, 2026, gives Unit 3 seven topics and no weights among them, so the spread is ours: the production function (8 questions), short-run costs (14), long-run costs (8), types of profit (7), profit maximization (6), the decisions to produce, shut down, enter or exit (9) and perfect competition (14).

Tables and graphs in words

The exam gives cost tables and has you draw a firm beside its market. Here each table is a short run of numbers to work from, and each graph is described: where price sits against average total cost and average variable cost, and what entry or exit does next.

  • A change in fixed cost never moves marginal cost, so it never changes the best output in the short run.
  • Zero economic profit is not failure. Every cost is paid, the owner's time and money included.

Questions and answers

What is Unit 3 of AP Microeconomics?

Production, Cost, and the Perfect Competition Model, the third of six units. It carries 22 to 25% of the multiple-choice section, by the College Board's course page, and the description allows about 11 to 13 class periods.

What should an AP Microeconomics Unit 3 exam study guide cover?

Marginal and average product and diminishing returns; fixed, variable, average and marginal cost; economies of scale; accounting, economic and normal profit; the rule that marginal revenue equals marginal cost; the shutdown rule; and the short-run and long-run equilibrium of a perfectly competitive firm.

When should a firm shut down in the short run?

When price is below average variable cost at every output, so revenue cannot cover variable cost. The firm then loses only its fixed cost. If price is above average variable cost, producing at a loss still loses less.

Why do perfectly competitive firms earn zero economic profit in the long run?

Profits draw new firms in, which raises supply and lowers the price. Losses drive firms out, which does the reverse. Entry and exit stop only when price equals minimum average total cost, where economic profit is zero.

More tests

Show 8 more

Browse Civics and Law