Average Total Cost vs Marginal Cost

Average Total Cost is the total cost per unit of output produced.

It is found by dividing total cost by the quantity of output. Average total cost includes both average fixed and average variable costs and typically forms a U-shaped curve due to spreading fixed costs and diminishing returns.

Marginal Cost is the additional cost incurred by producing one more unit of output.

It is calculated as the change in total cost divided by the change in quantity. Marginal cost typically decreases at first due to increasing marginal returns, then rises due to diminishing returns.