Average Total Cost
Plain definition
Total cost divided by the quantity of output — the cost per unit of everything the firm produces (ATC = TC ÷ Q).
In economics
Average total cost (also called average cost or unit cost) has a U-shape in the short run: it falls while spreading fixed costs dominates, then rises when diminishing returns take over. In the long run, the ATC envelope reveals economies and diseconomies of scale, and price must exceed ATC for the firm to earn an economic profit.
Example
If total cost is 2 per loaf.
Common confusion
Average total cost is not marginal cost. ATC spreads all costs across every unit produced; MC is the cost of one more unit. Break-even analysis uses ATC (price must cover ATC for profit), while output decisions use MC.