Average Fixed Cost (AFC)

Definition

Average Fixed Cost is calculated by dividing fixed costs by the quantity produced. It represents the fixed cost per unit of output for a firm.

Related terms

Total Fixed Cost (TFC): The sum of all costs that do not change with changes in production levels.

Marginal Cost (MC): The additional cost incurred by producing one more unit of output.

Average Variable Cost (AVC): Calculated by dividing variable costs by the quantity produced. It represents the variable cost per unit of output for a firm.