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Question
Microeconomics
Posted 2 months ago

Which of the following best describes average total cost?
Choose 1 answer:
(A) The cost of producing a typical unit of output
(B) The cost of producing one more unit of output
(C) The costs that do not vary as output changes, per unit of output
(D) The costs that do not vary as output changes
(E) The costs that vary as output changes, per unit of output
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Answer from Sia
Posted 2 months ago
Solution
a
Definition of Average Total Cost: Average Total Cost (ATC) is defined as the total cost (TC) divided by the quantity of output produced (Q). Mathematically, it is expressed as ATC=TCQATC = \frac{TC}{Q}
b
Analysis of Options: - Option (A): This describes the cost of producing a typical unit of output, which aligns with the definition of ATC. - Option (B): This describes marginal cost (MC), not ATC. - Option (C): This describes average fixed cost (AFC), not ATC. - Option (D): This describes total fixed cost (TFC), not ATC. - Option (E): This describes average variable cost (AVC), not ATC
Answer
(A) The cost of producing a typical unit of output
Key Concept
Average Total Cost (ATC)
Explanation
Average Total Cost (ATC) is the total cost divided by the quantity of output produced, which is best described by option (A).

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