costs, average variable costs, and marginal costs. These new measures analyze costs on a per-unit (rather than

a total) basis and are reflected in the curves in Figure 7.8.

FIGURE 7.8 Cost Curves at the Clip Joint We can also present the information on total costs, fixed cost, and variable

cost on a per-unit basis. We calculate average total cost (ATC) by dividing total cost by the total quantity produced.

The average total cost curve is typically U-shaped. We calculate average variable cost (AVC) by dividing variable cost

by the quantity produced. The average variable cost curve lies below the average total cost curve and is also

typically U-shaped. We calculate marginal cost (MC) by taking the change in total cost between two levels of output

and dividing by the change in output. The marginal cost curve is upward-sloping.
170 7 • Production, Costs, and Industry Structure

Labor Quantity

Fixed

Cost

Variable

Cost

Total

Cost

Marginal

Average Total

Average Variable
{"file_type": ".pdf", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "file_name": "Microeconomics3e.pdf", "file_size_mb": 26.99, "uploaded_via": "batch_uploader", "producer": "Prince 14.2 (www.princexml.com)", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "total_pages": 597, "moddate": "2022-12-07T14:23:05-06:00", "batch_upload": true, "upload_timestamp": "2026-02-07T15:24:38.309401", "creator": "PDFMiner", "title": "Principles of Microeconomics 3e", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "creationdate": "2022-12-07T14:15:44-06:00"}