Which of the following is correct?
A)Total Fixed Cost = Total Cost + Total Variable Cost
B)Total Cost = Total Variable Cost + Marginal Cost
C)Average Fixed Cost = Average Total Cost - Average Variable Cost
D)Average Total Cost = Marginal Cost + Average Fixed Cost

Question

Quizplus · Accepted Answer

Option A is incorrect because Total Fixed Cost is a component of Total Cost, therefore it cannot be equal to the sum of both Total Cost and Total Variable Cost. 
Option B is incorrect because Total Cost = Total Fixed Cost + Total Variable Cost, and Marginal Cost is the additional cost incurred when producing one additional unit, therefore it cannot be equal to Total Cost. 
Option D is incorrect because Marginal Cost is the additional cost incurred when producing one additional unit, and Average Fixed Cost is the fixed cost per unit of output, therefore it cannot be equal to Average Total Cost. 
Option C is correct because Average Fixed Cost is the fixed cost per unit of output, and Average Variable Cost is the variable cost per unit of output, therefore their difference equals Average Total Cost.

Which of the Following Is Correct