Average Total Cost or Average Cost:
Average total cost is simply termed as average cost that is the net cost divided by the number of units of output generated.
AC = TC / Q
AC = Average CostTC = Total CostQ = number of units of output generatedAverage cost is the summation of average fixed cost and average variable cost. That is,
AC = AFC+AVC
Table: Calculation of Average Fixed, Average variable and Average Total Cost
The average cost is also termed as the unit cost as it is the cost per unit of output produced. The following figure exhibits the shape of AFC, AVC & ATC in short period.
Figure: Short run average cost curves
From the figure above, it can be understood that the behavior of the average total cost curve based on the behavior of AFC and AVC curves. In beginning, both AFC and AVC drop. Therefore ATC curve drops.
Whenever AVC curve starts rising, AFC curve falls steeply that is, fall in AFC is greater than the rise in AVC. Therefore ATC curve continues to drop. However as output rises further, there is a sharp rise in AVC that is greater than the fall in AFC. Therefore ATC curve mounts after a point. The ATC curve similar to AVC curve falls first, reaches the minimum value and then increases. Therefore it has taken a U shape.
Latest technology based Economics Online Tutoring Assistance
Tutors, at the www.tutorsglobe.com, take pledge to provide full satisfaction and assurance in Cost and Revenue help via online tutoring. Students are getting 100% satisfaction by online tutors across the globe. Here you can get homework help for Cost and Revenue, project ideas and tutorials. We provide email based Cost and Revenue help. You can join us to ask queries 24x7 with live, experienced and qualified online tutors specialized in Cost and Revenue. Through Online Tutoring, you would be able to complete your homework or assignments at your home. Tutors at the TutorsGlobe are committed to provide the best quality online tutoring assistance for Economics Homework help and assignment help services. They use their experience, as they have solved thousands of Economics assignments, which may help you to solve your complex issues of Cost and Revenue. TutorsGlobe assure for the best quality compliance to your homework. Compromise with quality is not in our dictionary. If we feel that we are not able to provide the homework help as per the deadline or given instruction by the student, we refund the money of the student without any delay.
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!