AVERAGE COST
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This document discusses average cost of production and how it is calculated. Average cost is total cost divided by the number of units produced. In the short run, fixed costs are zero and variable costs are constant. In the long run, a firm can vary quantities and all inputs are variable, allowing the unit cost to be calculated based on a certain level of output.
AVERAGE COST
- 1. Saran Chandran S1 MBA
- 2. Average cost of production is the cost of production of one unit
- 3. It is calculated by dividing the total cost by the number of units produced. AC=TC/Q C=TC/Q TC= Total cost of production Q= No. of units produced
- 4. Average Cost Short Run Average Cost Long Run Average Cost
- 5. * Here fixed costs are zero * Variable costs constant
- 6. * Long run is a time frame in which the firm can vary the quantities * Unit cost of producing a certain output when all inputs are variable