Question

Problem 19

Answer 1

Introduction

Fixed Cost is the costs that remain fixed irrespective of the level of production.

Variable Costs are costs that vary with the level of production.

Average total cost (simply referred to as average cost) is measured by dividing the total cost by the quantity of output. 

Average variable cost is known as the average of the variable cost so it is calculated by dividing the variable cost by quantity of output. 

Marginal cost is different from both average total cost and average variable cost. It is the additional cost of producing one more unit of output. So it is not the cost per unit of all units being produced, but only the next one (or next few).