Tc/Q =

Analyze the question: TC/Q means Total Cost divided by Quantity produced (output). We need to identify what this ratio is called.

Concept: In the theory of cost, the main cost measures are:

• Total Cost (TC) = Total Fixed Cost + Total Variable Cost
• Average Cost (AC) = Total Cost ÷ Quantity of output
• Marginal Cost (MC) = Change in Total Cost ÷ Change in Quantity (ΔTC/ΔQ)

Step-by-step solution:

1. The expression is TC/Q, with total cost in the numerator and output in the denominator.
2. Dividing total cost by the number of units produced gives the cost per unit, which is Average Cost (also called Average Total Cost or unit cost).
3. Check the other options: • Marginal cost is ΔTC/ΔQ, the extra cost of producing one more unit, not TC/Q. • Total cost is TC itself, not divided by anything. • Equilibrium level refers to where demand equals supply or where a firm's MC = MR, so it is unrelated to this formula.

Example: If a bakery in Ibadan spends ₦50,000 to produce 500 loaves, then AC = 50,000 ÷ 500 = ₦100 per loaf.

Answer: B. Average cost (the option's "coat" is a typo for "cost").

Exam tip: Remember "A" in Average = "divide by Quantity." Average = Total ÷ Quantity (AC = TC/Q, AVC = TVC/Q, AFC = TFC/Q). Marginal always involves a change (Δ), so look for the delta sign.