Essential AP Microeconomics
Formulas
AVERAGE PRODUCT
(AP)
TOTAL PRODUCT (TP
OR Q)/LABOR (L)
MARGINAL PRODUCT
(MP)
ΔTP/ΔL
PROFIT
TOTAL REVENUE (TR) – TOTAL
COST (TC)
TOTAL COST
TOTAL FIXED COSTS (TFC) +
TOTAL VARIABLE COSTS (TVC)
AVERAGE COST (AC)
TOTAL COSTS (TC) / QUANTITY
(Q)
AVERAGE FIXED COSTS (AFC)
TOTAL FIXED COSTS (TFC) /
QUANTITY (Q)
AVERAGE VARIABLE COSTS (AVC)
TOTAL VARIABLE COST (TVC) /
QUANTITY (Q)
AVERAGE REVENUE (AR)
TOTAL REVENUE (TR) / QUANTITY
(Q)
IN PERFECT COMPETITION…
DEMAND (D) = AVERAGE
REVENUE (AR) = PRICE (P)
MARGINAL REVENUE (MR)
ΔTR / ΔQ (OR ΔTP)
MARGINAL COST (MC)
ΔTC / ΔQ
PROFIT MAXIMIZATION POINT
WHERE MR = MC
“BREAKEVEN” POINT
WHERE P = ATC
SHUTDOWN POINT
WHERE P = AVC