Average Fixed Costs (AFC) is equal to A. Average Total Cost (ATC) - Average Variable Cost (AVC). B. [Total Costs (TC) - Total Variable Costs (TVC)] / Quantity (Q). C. Total Fixed Costs (TFC) / Quantity (Q). D. all of the above. E. none of the above.

Average Fixed Costs (AFC) is equal to A. Average Total Cost (ATC) - Average Variable Cost (AVC). B. [Total Costs (TC) - Total Variable Costs (TVC)] / Quantity (Q). C. Total Fixed Costs (TFC) / Quantity (Q). D. all of the above. E. none of the above.

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter7: Production, Inputs, And Cost: Building Blocks For Supply Analysis

Section: Chapter Questions

Problem 1DQ

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Question

Average Fixed Costs (AFC) is equal to

A. Average Total Cost (ATC) - Average Variable Cost (AVC).

B. [Total Costs (TC) - Total Variable Costs (TVC)] / Quantity (Q).

C. Total Fixed Costs (TFC) / Quantity (Q).

D. all of the above.

E. none of the above.

Definition Definition Measure of the cost of production per unit of output, including only variable costs such as wages, materials, and utilities. AVC is calculated by dividing total variable cost by the number of units produced. Understanding average variable cost is important for businesses to make decisions on pricing, production levels, and profitability.

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