Derivation of Short-Run Average Cost: AVC,ATC,AFC

 

 

a.     Average Fixed Cot (AFC)

It is obtained by dividing the TFC by the level of output. Mathematically;

AFC=TFC/Q

b.     Average Variable Cost (AVC)

It is obtained by dividing the total variable cost with the corresponding level of output. Mathematically;

AVC=TVC/Q

c.      Average Total Cost (ATC)

It is obtained b adding AFC and AVC. Mathematically;

ATC=TC/Q

Derivation of AFC, AVC and ATC

Output	TFC	TVC	TC	ATC	AVC	AFC
0	20	0	20	-	0	-
1	20	30	50	50	30	20
2	20	50	70	35	25	10
3	20	70	90	30	23.5	6.67
4	20	90	110	27.50	22.5	5
5	20	140	160	32	28	4
6	20	220	240	40	36.5	3.33