Average total cost equals: a

Accounting Dec 08, 2020

Average total cost equals:

a. MC + FC.

b. AFC /MC.

c. AFC + AVC.

d. AVC /VC.

Expert Solution

The correct option is c), AFC+AVC.

Average Fixed costs (AFC) are expenditures on which the quantity of production generated (Q) does not depend. Average Variable cost (AVC) is expenditure that increases with the amount of production generated (Q). The average total cost is the overall amount of average variable cost and the average fixed cost. That is ATC=AFC+AVC.

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