Question

Which of the following expressions is correct?

A.marginal cost = (change in quantity of output)/(change in total cost)
B.average total cost = (total cost)/(quantity of output)
C.total cost = variable cost + marginal cost average
D.variable cost = (quantity of output)/(total variable cost)

Answer 1

The correct answer is option B.

Step-by-step explanation:

Average Total cost refers to the average cost it takes to produce one unit of the product.

It is arrived at by:

1) Determining all the costs ( variable and fixed costs) and summing them all.

Total Costs= Variable costs + Fixed Costs

2) Determining the total number of the units produced.

Therefore to establish the total average cost you will have to divide the total cost( Variable and Fixed) with the total number of units produced.

Total Average Costs = Total cost ( variable+ fixed)/ Total units of output.