Average fixed cost (AFC) is an economics term that refers to fixed costs of production (FC) divided by the quantity (Q) of output produced.
Average fixed cost is a per-unit-of-output measure of fixed costs. As the total number of goods produced increases, the average fixed cost decreases because the same amount of fixed costs is being spread over a larger number of units of output.
Average variable cost plus average fixed cost equals average total cost.
Famous quotes containing the words average, fixed and/or cost:
“Three million of such stones would be needed before the work was done. Three million stones of an average weight of 5,000 pounds, every stone cut precisely to fit into its destined place in the great pyramid. From the quarries they pulled the stones across the desert to the banks of the Nile. Never in the history of the world had so great a task been performed. Their faith gave them strength, and their joy gave them song.”
—William Faulkner (1897–1962)
“Every morning I woke in dread, waiting for the day nurse to go on her rounds and announce from the list of names in her hand whether or not I was for shock treatment, the new and fashionable means of quieting people and of making them realize that orders are to be obeyed and floors are to be polished without anyone protesting and faces are to be made to be fixed into smiles and weeping is a crime.”
—Janet Frame (b. 1924)
“The cost of a thing is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run.”
—Henry David Thoreau (1817–1862)