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:
“From a hasty glance through the various tests I figure it out that I would be classified in Group B, indicating “Low Average Ability,” reserved usually for those just learning to speak the English Language and preparing for a career of holding a spike while another man hits it.”
—Robert Benchley (1889–1945)
“This people must cease to hold slaves, and to make war on Mexico, though it cost them their existence as a people.”
—Henry David Thoreau (1817–1862)