The correct answer is: D. AFC + AVC = ATC
Average total cost (ATC) is the sum of average fixed cost (AFC) and average variable cost (AVC).
Average fixed cost (AFC) is the total fixed cost divided by the number of units produced.
Average variable cost (AVC) is the total variable cost divided by the number of units produced.
Therefore, ATC = AFC + AVC.
Here is a diagram that illustrates the relationship between ATC, AFC, and AVC:
[Diagram of ATC, AFC, and AVC]
The graph shows that ATC is the sum of AFC and AVC. As the number of units produced increases, ATC decreases at first because AFC decreases. However, as the number of units produced increases further, AVC begins to increase, and ATC eventually increases.
I hope this explanation is helpful! Let me know if you have any other questions.