In economics, average cost or unit cost is equal to total cost divided by the number of goods produced (the output quantity, Q). It is also equal to the sum of average variable costs (total variable costs divided by Q) plus average fixed costs (total fixed costs divided by Q). Average costs may be dependent on the time period considered (increasing production may be expensive or impossible in the short term, for example). Average costs affect the supply curve and are a fundamental component of supply and demand.
Read more about Average Cost: Short-run Average Cost, Long-run Average Cost, Relationship To Marginal Cost, Relationship Between AC, AFC, AVC and MC
Other articles related to "cost, costs, average cost, average":
... Total cost (TC) Total Cost equal fixed cost plus variable costs ... Variable cost (VC) Variable costs are the costs paid to the variable input ... Total variable cost (TVC) or (VC) total variable costs is the same as variable costs ...
... The Average Fixed Cost curve (AFC) starts from a height and goes on declining continuously as production increases ... The Average Variable Cost curve, Average Cost curve and the Marginal Cost curve start from a height, reach the minimum points, then rise sharply and continuously ... The Average Fixed Cost curve approaches zero asymptotically ...
... Moving average cost (MAC) is a slight permutation of the above, with the average being calculated from the previous average and new price ...
... each doubling of the total quantity of items produced, costs decrease by the same proportion, as described by Equations 1 and 2 ... In this equation, Y represents the cost of a specified unit in a production run ... This equation describes the basis for the cumulative average or cum average curve ...
... ADD Stock at beginning of period ADD Stock purchased during the period AVERAGE total cost by total qty to arrive at the Average Cost of Goods for the period ... This Average Cost Price is applied to all movements and adjustments in that period ... Multiplying the stock balance in qty by the Average cost gives the Stock cost at the end of the period ...
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