[amp_mcq option1=”MC” option2=”AVC” option3=”ATC” option4=”AFC” correct=”option1″]<\/p>\n
Unit cost is another name for average variable cost (AVC). Average variable cost is the total variable cost divided by the number of units produced. It is a measure of the cost per unit of output.<\/p>\n
Marginal cost (MC) is the change in total cost that results from producing one additional unit of output. Average total cost (ATC) is the total cost divided by the number of units produced. It is a measure of the average cost per unit of output. Average fixed cost (AFC) is the fixed cost divided by the number of units produced. It is a measure of the average fixed cost per unit of output.<\/p>\n
AVC is the most relevant cost concept for short-run decision making, because it is the only cost that varies with output in the short run. MC is the most relevant cost concept for long-run decision making, because it is the only cost that is relevant to the decision of whether to produce or not produce. ATC is a useful measure of the overall efficiency of a firm, because it takes into account both variable and fixed costs. AFC is a useful measure of the cost of using a fixed factor of production, such as a factory or machine.<\/p>\n","protected":false},"excerpt":{"rendered":"
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