Average Fixed Cost [AFC] Law and Legal Definition

Average fixed cost (AFC) is the total fixed cost divided by number of units of production. Since the output increases when the fixed costs are spread further and further, the average fixed cost will decline as output increases. AFC is helpful in counting total costs and per unit costs. AFC can be found in two ways. The first method is by dividing total fixed cost by the quantity of output. Second method is by subtracting average variable cost from average total cost.