Glossary · Micro · Production and costs

Average total cost (ATC)

Total cost per unit of output, . It is U-shaped: falling at first as fixed cost is spread over more units, then rising as diminishing returns push marginal cost up. Marginal cost crosses it at its lowest point.

Also called: ATC, average cost, AC, unit cost

Taught in: Average and Marginal Cost

Related terms

Marginal cost (MC)Average variable cost (AVC)Average fixed cost (AFC)Minimum efficient scale (MES)

More from production and costs

Average product of labor (APL)Cobb-Douglas production functionEconomies and diseconomies of scaleFixed cost (FC)IsoquantLaw of diminishing marginal returns

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