Q.(MCQ) Average Total Cost (AC) is equal to:

Since total cost is fixed cost plus variable cost, dividing every term by output shows that average cost is average fixed cost plus average variable cost. …

Given: identify what Average Total Cost equals.

Step 1 — Start from the total-cost identity: $TC=TFC+TVC$.

Step 2 — Divide every term by output $Q$: $\dfrac{TC}{Q}=\dfrac{TFC}{Q}+\dfrac{TVC}{Q}$, which is $AC=AFC+AVC$. So the answer is (b).

Step 3 — Why the other options are wrong: (a) and (c) use subtraction, which would wrongly make average cost smaller than one of its own components — costs add, they do not net off. (d) $MC+AFC$ has no basis: marginal cost is the addition to total cost per unit, an entirely different concept from the per-unit averages, …

Confusing this identity with the MC relationship — AC equals AFC+AVC (an accounting identity true at every output), whereas MC only equals AC at …