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:
“In the middle classes the gifted son of a family is always the poorestusually a writer or artist with no sense for speculationand in a family of peasants, where the average comfort is just over penury, the gifted son sinks also, and is soon a tramp on the roadside.”
—J.M. (John Millington)
“It is not enough for theory to describe and analyse, it must itself be an event in the universe it describes. In order to do this theory must partake of and become the acceleration of this logic. It must tear itself from all referents and take pride only in the future. Theory must operate on time at the cost of a deliberate distortion of present reality.”
—Jean Baudrillard (b. 1929)