Average Cost is the cost per unit of output produced. It is also
called unit cost of production.
Average
cost
= Total cost / Output
AC
= TC / Q
Calculating AC when Total Cost is given
Units of
Output
|
Total Cost
|
AC
= TC/ Q
|
0
1
2
3
4
5
6
|
10
20
28
34
38
42
48
|
∞
20
14
11.3
9.5
8.4
8
|
Corresponding to three types of total cost in the
short run, there are three types of
average cost:
1)
Average Fixed cost
2)
Average Variable cost
3)
Average total cost
Average Total Cost is the sum total of average Fixed
cost and average variable cost.i.e.
AC
= AFC + AVC
