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Question
What is the correct relation between Average Total Cost (ATC), Average Fixed Cost (AFC), and Average Variable Cost (AVC)?
Options
ATC = AFC − AVC
ATC = AFC × AVC
ATC = AFC + AVC
ATC = AVC − AFC
MCQ
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Solution
ATC = AFC + AVC
Explanation:
Average Total Cost is the total cost per unit and is calculated by adding Average Fixed Cost and Average Variable Cost (ATC = AFC + AVC).
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