Which of the following is true about average total cost (ATC)?

Question

Average total cost (ATC) is the cost of production per unit of labor.

ATC = TC × Q

Average total cost (ATC) is the cost of production per factor of production.

Average total cost (ATC) is the cost of production per unit of output.

Answer 1

The correct statement about average total cost (ATC) is:

Average total cost (ATC) is the cost of production per unit of output.

ATC is calculated by dividing total costs (TC) by the quantity of output (Q), which can be expressed as:

\[ \text{ATC} = \frac{\text{TC}}{Q} \]

None of the other statements accurately describe ATC.