Fixed and variable costs

Average total cost (ATC)

How much it costs to produce one unit of output ATC= TC/ Q ATC= AFC+AVC

Average fixed cost (AFC)

How much you are paying in fixed cost to produce one item AFC=TFC/Q

Average variable cost (AVC)

How much you are spending on labor to produce one item AVC=TVC/Q AVC= wage/APP

Marginal cost (MC)

The additional cost of producing one more unit of output MC=wage/ MPP

Variable costs

A cost whose amount does change according to output level Labor, supplies/inventory

Fixed costs

A cost whose amount does not change according to output level Rent, property taxes, payments on loans

Total fixed cost (TFC)

All of the fixed costs you are paying to produce output

Total variable costs (TVC)

All of the money you are paying for your labor force TVC= wage/ L

Total cost (TC)

All of the money you are spending to produce all of your output TC= TFC+ TVC