What is the point of output that will minimise the average total cost?
krishna-agrawala Teacher Graduate School I an not sure if it is possible to draw diagrams on this forum of question and answer. However, I will answer your question in words and some simple mathematical expressions. First of all let us understand the nature of costs involved in producing any item. Let us say we are producing toothbrushes on a simple tooth brush making machine. Irrespective of number of toothbrush produced in a day we will incur some fixed costs such as rent for the place where machine is installed, depreciation on machine, interest on the money invested in the manufacturing facility, wages of the person operating the machine. This is the fixed cost of production which remains constant irrespective of the number of toothbrushes produced from the machine. As we increase the production of toothbrushes it gets distributed over increasing number of toothbrushes. If we draw a graph of fixed cost on Y-axis against the total production on X-axis it will be a downward sloping c
