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:
“Personally, I can’t see why it would be any less romantic to find a husband in a nice four-color catalogue than in the average downtown bar at happy hour.”
—Barbara Ehrenreich (b. 1941)
“To call a posit a posit is not to patronize it. A posit can be unavoidable except at the cost of other no less artificial expedients. Everything to which we concede existence is a posit from the standpoint of a description of the theory-building process, and simultaneously real from the standpoint of the theory that is being built.”
—Willard Van Orman Quine (b. 1908)