Formulas | AP Micro MV 2025-2026

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9 Terms

1
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Average Fixed Cost (AFC)

Total Fixed Costs (TFC) divided by quantity (Q); AFC = TFC / Q

2
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Average Variable Cost (AVC)

Total Variable Costs (TVC) divided by quantity (Q); AVC = TVC / Q

3
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Average Total Cost (ATC)

Total Cost (TC) divided by quantity (Q); ATC = AFC + AVC

4
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Marginal Cost (MC)

Change in Total Cost divided by change in quantity; MC = ΔTC / ΔQ

5
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Marginal Revenue Product (MRP)

Marginal Product of Labor (MPL) multiplied by Marginal Revenue (MR); MRP = MPL × MR

6
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Profit-Maximizing Resource Employment

Firm hires resources where Marginal Revenue Product equals Marginal Resource Cost; MRP = MRC

7
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Total Cost (TC)

Sum of Total Fixed Costs and Total Variable Costs; TC = TFC + TVC

8
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Total Revenue Test

When price increases and total revenue decreases, demand is elastic; when price increases and total revenue increases, demand is inelastic

9
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Utility Maximizing Rule

Consumers allocate spending so that marginal utility per dollar spent is equal across goods; MUx / Px = MUy / Py