Question

Which of the following sets of values are necessary to compute average total cost (ATC)?

a. Total Variable Cost and Output
b. Total Cost and Output
c. Average Fixed Cost and Average Variable Cost

Answer 1

The average total cost (ATC) is calculated by dividing the Total Cost by the Output (total quantity produced).

Step-by-step explanation:

To compute average total cost (ATC), the necessary set of values is Total Cost and Output. The ATC is found by dividing the Total Cost by the Total Quantity Produced or Output. This measure is presented on a per-unit basis and the ATC curve is typically U-shaped, capturing how costs per unit change with variations in output.