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Average Cost Definition and Explanation PDF Download

Learn Average Cost definition in marketing with explanation to study “What is Average Cost”. Study average cost explanation with marketing terms to review marketing course for online MBA programs.

Average Cost Definition:

  • Cost per unit at a given level of production; it is equal to total costs divided by production.

    Principles of Marketing by Philip T. Kotler, Gary Armstrong

Average Cost Explanation:

It is defined as production cost per unit of output, calculated by dividing with the total of fixed costs by the number of total units produced. It can be measured by fixed cost + variable costs divided by total output. The average cost curve is usually u-shaped indicates, cost is high, when number of units produced is lower in quantity. Whereas, decreasing cost shows the number of increase units.

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