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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