Q describes how many units of a good or service a firm produces to sell on the market. Keep in mind you have to keep track of your businesss fixed costs differently than you would your own. If we divide both sides of the equation by output Q we get.
Q describes how many units of a good or service a firm produces to sell on the market.
MethodAverage Total Cost is calculated asAverage Total Cost Total Cost Quantity of Units ProducedAverage Total. Calculate this cost by dividing the total cost of production that you computed in step three by the number of units that were produced learned in step four. 1 Start by finding the quantity Q which is the number of units the company is producing. Average Fixed Costs 200000 400 5000 Therefore there are average fixed costs of 5000 per unit.