Which formula represents average total cost (ATC)?

Average total cost (ATC) is a crucial concept in microeconomics that helps businesses understand their cost structure on a per-unit basis. The formula for average total cost is derived from the total cost (TC) of production, which includes both fixed costs (FC) and variable costs (VC).

To find average total cost, you take the total cost incurred in producing a certain quantity of goods and divide it by the number of units produced (Q). This gives you the cost associated with producing one additional unit, averaging the costs over all units produced. Therefore, the appropriate representation for average total cost is the total cost divided by quantity, reflected accurately in the formula TC/Q.

This delineation helps in decision-making processes for firms, particularly in setting prices and assessing profitability at given levels of output, highlighting the importance of understanding how total costs scale with production.