Which of the following best describes average total cost?
Choose 1 answer:
(A) The cost of producing a typical unit of output
(B) The costs that vary as output changes, per unit of output
(C) The cost of producing one more unit of output
(D) The costs that do not vary as output changes
(E) The costs that do not vary as output changes, per unit of output

Question

Accepted Answer

∻Solution∻ ‖ a ⋮ Definition of Average Total Cost: Average total cost (ATC) is defined as the total cost of production divided by the quantity of output produced. It is represented by the formula $ATC = \frac{TC}{Q}$, where $TC$ is total cost and $Q$ is the quantity of output. ‖ ‖ b ⋮ Analysis of Options: - Option (A) suggests ATC is the cost of producing a typical unit of output, which aligns with the definition of ATC. - Option (B) refers to variable costs per unit, which is average variable cost (AVC), not ATC. - Option (C) describes marginal cost (MC), not ATC. - Option (D) and (E) describe fixed costs, which are part of total costs but do not alone represent ATC. ‖ ∻Answer∻ ⚹ (A) The cost of producing a typical unit of output ⚹ ∻Key Concept∻ ⚹ Average Total Cost ⚹ ∻Explanation∻ ⚹ Average total cost is the cost of producing a typical unit of output, calculated by dividing total cost by the quantity of output. ⚹◊What is the formula for calculating average total cost in macro⍭ Generate me a similar question◊

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