Average fixed cost

In economics, average fixed cost (AFC) is the fixed costs of production (FC) divided by the quantity (Q) of output produced.

As the total number of units of the good produced increases, the average fixed cost decreases because the same amount of fixed costs is being spread over a larger number of units of output.

Similarly, the average fixed cost of producing 10 shirts would be 3 dollars derived from 30 dollars divided by 10 shirts.

Similarly, the firm produces 10 shirts and average total cost and average variable cost is 10 dollars and 7 dollars respectively.

In this case, the average fixed cost would be 3 dollars.