ATC (Average Total Cost)

Definition

Average Total Cost (ATC) represents the average cost per unit produced by dividing total costs by total output. It includes both fixed costs (costs that do not change with the level of output) and variable costs (costs that vary with the level of output).

Related terms

Marginal Cost: Marginal cost refers to the additional cost incurred by producing one more unit of output.

Total Fixed Cost: Total fixed cost is the sum of all costs that do not change regardless of the level of production.

Economies of Scale: Economies of scale occur when a firm experiences a decrease in average total cost as it increases its level of production.