Average total cost is equal to which one and why? output/total cost total cost-total quantity of output average variable cost+total fixed cost total cost/output

Accounting Dec 09, 2020

Average total cost is equal to which one and why?

output/total cost

total cost-total quantity of output

average variable cost+total fixed cost

total cost/output

Expert Solution

Average total cost is, by definition, equal to total cost divided by output.

Average total cost is also equal to average variable cost plus average fixed cost. This is because total cost = fixed cost + variable cost, therefore, we have:

average total cost = (fixed cost + variable cost ) / total output
average total cost = fixed cost / total output + variable cost / total output
average total cost = average fixed cost + average variable cost

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