Average Total Cost (ATC)
Definition
ATC refers to the average cost of producing each unit of output. It is calculated by dividing total cost by the quantity produced.
Analogy
Think of ATC as the average cost per slice of pizza at a pizzeria. If you divide the total cost of making all the pizzas by the number of slices, you get the average total cost per slice.
Related terms
Marginal Cost (MC): MC represents the additional cost incurred when producing one more unit of output.
Fixed Costs (FC): FC are expenses that do not change with changes in production levels, such as rent or salaries.
Variable Costs (VC): VC are expenses that vary with changes in production levels, such as raw materials or labor costs.
"Average Total Cost (ATC)" appears in:
Study guides (4)
Practice Questions (8)
Which cost curve intersects both the average variable cost (AVC) and average total cost (ATC) at their minimum points?
What happens to average total cost (ATC) when marginal cost (MC) is less than ATC?
What is the relationship between average total cost (ATC) and average variable cost (AVC) as quantity increases?
What happens to average total cost (ATC) when marginal cost (MC) increases above ATC?
The point where the average total cost (ATC) is at its lowest is achieved when?
What happens to the average total cost (ATC) when a car company produces 100,000 cars?
How does a per-unit tax impact marginal cost and average total cost (ATC)?
What is the impact of a per-unit tax on average total cost (ATC) in a regulated market?
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