Because average total cost is total cost per unit of output, it can be found by dividing total cost by the quantity of output. Alternatively, because total cost is the sum of total variable cost and total fixed cost, average total cost can be derived by summing average variable cost and average fixed cost. The formula used to calculate this is as follows: Average Total Costs = Total Costs / Output Units Fixed Costs: A cost that does not vary depending on production or sales levels, such as rent, property tax, insurance, or interest expense. Average Fixed Costs: Average fixed cost is the total fixed cost per unit of output incurred when a firm engages in short-run production. It can be found in two ways.
Because average fixed cost is total fixed cost per unit of output, it can be found by dividing total fixed cost by the quantity of output. Alternatively, because total fixed e derived by subtracting average variable cost from average total cost. The formula used to calculate this is as follows: Average Fixed Costs = Fixed Costs / Output Units Average Variable Cost: Average variable cost is the total variable cost per unit of output incurred when a firm engages in short-run production. It can be found in two ways. Because average variable cost is total variable cost per unit of output, it can be found by dividing total variable cost by the quantity of output.
Alternatively, because total variable cost is the difference between of total cost and total fixed cost, average arable cost can be derived by subtracting average fixed cost from average total cost. The formula used to calculate this is as follows: Average Variable Costs = (Total Costs-fixed Costs) / Output Units Marginal Cost: The marginal cost of an additional unit of output is the cost of the additional inputs needed to produce that output. More formally, the marginal cost is the derivative of total production costs with respect to the level of output. The formula used to calculate this is as follows: Marginal Costs = (Change in Total Costs-Actual Total Costs) / (Change in Output Units- Actual Output Units)
