Average total cost equals
A) marginal cost divided by output.
B) average fixed cost plus average variable cost.
C) total fixed cost plus total variable cost.
D) marginal cost plus opportunity cost.
E) marginal cost multiplied by the quantity of output.

Question

Quizplus · Accepted Answer

Average total cost (ATC) is equal to the total cost divided by the output. The total cost is the sum of the total fixed cost (TFC) and the total variable cost (TVC). Therefore, ATC is equal to the sum of the average fixed cost (AFC) and the average variable cost (AVC), which is choice B. It is not equal to marginal cost divided by output (choice A), or total fixed cost plus total variable cost (choice C), or marginal cost plus opportunity cost (choice D), or marginal cost multiplied by the quantity of output (choice E).

Average Total Cost Equals