Average Fixed Cost

Definition

Average fixed cost represents the fixed cost per unit of output produced, calculated by dividing total fixed cost by the quantity of output. It does not vary with changes in production.

Related terms

Fixed Costs: Fixed costs are expenses that do not change with changes in production levels, such as rent or insurance.

Long-run Costs: Long-run costs refer to expenses that can be adjusted over a longer time frame, allowing for changes in both fixed and variable costs.

Average Total Cost: Average total cost includes both fixed and variable costs per unit of output produced.