Which of the following is correct?
A)AC = AFC/Q
B)AC = AFC + AVC
C)AC = MFC + MVC
D)TFC + TMC = MFC + MVC

Question

Quizplus · Accepted Answer

The formula for Average Cost (AC) is calculated by dividing Total Cost (TC) by Quantity (Q), which can be represented as AC = TC/Q. Using the Short Run Cost curves, we can break down Total Cost into Fixed Cost (FC) and Variable Cost (VC), which is represented as TC = FC + VC. By replacing TC with FC + VC in the AC formula, we get AC = (FC + VC)/Q, which can be simplified as AC = AFC + AVC, where AFC stands for Average Fixed Cost and AVC for Average Variable Cost. Therefore, option B is the correct choice.

Which of the Following Is Correct