Average total cost is equal to:
A)average variable cost plus marginal cost
B)total cost less total output
C)average fixed cost plus average variable cost
D)average variable cost divided by total output

Question

Quizplus · Accepted Answer

Average total cost is equal to the sum of average fixed cost and average variable cost. This is because total cost is the sum of fixed cost and variable cost, and dividing by the total output (which is the same for both fixed and variable costs) yields the average costs. Option A is incorrect because it adds marginal cost (which is the cost of producing one additional unit) to the average variable cost, which doesn't make sense mathematically. Option B is incorrect because dividing total cost by total output yields average cost, not total cost minus output. Option D is incorrect because it divides average variable cost by total output, which doesn't produce a measure of total cost.

Average Total Cost Is Equal To