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Economics 12 Notes for Economics Notes

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Concepts of short run average cost

Concepts of short run average cost:

1. Average fixed cost (AFC):
AFC refers to the fixed cost spend per unit of output produced. It is obtained by dividing total fixed cost by total quantity of output produced.

AFC = TEC / Q

where,
AFC = average fixed cost
TFC = total fixed cost
Q = total quantity of output produced

2. Average variable cost (AVC):
AVC refers to the variable cost spend per unit of output produced. It is obtained by dividing total variable cost by total quantity of output produced.

AVC = TVC / Q

where,
AVC = average variable cost
TVC = total variable cost
Q = quantity of output produced

3. Average total cost (ATC):
It refers to the total cost spend per unit output produced. It is obtained by dividing total cost (TC) by quantity.

ATC = TC / Q

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