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