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Hello guys and welcome.
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I'll start presenting.
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Today i'm going to explain what does average fixed cost mean.
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But before i start, there are some keywords i need to define such as fixed costs.
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What does fixed cost mean? it's any cost that does not depend on the firm's level of output.
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These costs are incurred even if the firm is producing nothing.
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So let's take an example together.
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Let's suppose by the end of the month you need to pay the rent of a factory.
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You would be paying the same cost regardless of how much you produce, either one unit or 100 unit.
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Let's see the other keyword, which is total fixed cost.
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Also, we call it the overhead cost.
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It's the total of all costs, the sum that does not change with output even if the output is zero.
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We've reached to talk about average fixed costs.
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It's the total cost divided by the number of units of output.
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We're going to see this equation together.
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Please focus at that average fixed cost equals total fixed cost over quantity.
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We are going to use this equation by the end of this presentation as an exercise...