In economics, ATC stands for Average Total Cost, which is the cumulative total of all production costs divided by the amount of output produced. It is a measure of the per-unit cost of output and is useful for firms that want to compare the efficiency of various outputs or adjust various factors of production. Understanding ATC is essential to understanding how a firm chooses the prices for its products or services and how competition exists between firms. To calculate ATC, you need to determine the total quantity of output, determine the total cost, and divide the total cost by the total quantity. The formula for ATC is ATC = TC/Q, where TC is the total cost and Q is the total quantity. ATC is an essential piece of data for any firm, and selling products or services below the ATC would result in a financial loss for the business.