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
Famous quotes containing the words average and/or cost:
“The average Southerner has the speech patterns of someone slipping in and out of consciousness. I can change my shoes and socks faster than most people in Mississippi can speak a sentence.”
—Bill Bryson (b. 1951)
“Each is under the most sacred obligation not to squander the material committed to him, not to sap his strength in folly and vice, and to see at the least that he delivers a product worthy the labor and cost which have been expended on him.”
—Anna Julia Cooper (1859–1964)