No Bull Economics Lessons

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How do you calculate the per-unit costs of a firm?

Posted on April 16, 2014 at 8:00 PM

There are three types of total costs that all firms face: fixed costs (FC), variable costs (VC), and total costs (TC). Fixed costs must be paid to resource suppliers regardless of output and variable costs change with output. Fixed costs plus variable costs will equal a firm's total cost.


Per-unit costs are used to derive the firm's average cost curves, which you are expected to sketch on the AP Microeconomics exam. To get average costs, simply divide the total costs by the quantities being produced.


Average Fixed Cost = FC/Q

Average Variable Cost = VC/Q

Average Total Cost = TC/Q

Marginal Cost = Change in TC/Change in Q


AP Microeconomics Unit 2 Product Markets

Categories: AP Microeconomics, Micro Unit 2 Product Markets

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