Short Run Average Cost is equal to _________.

Correct option is A

The correct answer  is: (A) Average Variable Cost + Average Fixed Cost

The Short-Run Average Cost (SRAC) is the total cost per unit of output in the short run. It is the sum of Average Variable Cost (AVC) and Average Fixed Cost (AFC).

$$SRAC=AVC+AFC$$

Where:

• Average Variable Cost (AVC) = Total Variable Cost / Quantity (TVC/Q)
• Average Fixed Cost (AFC) = Total Fixed Cost / Quantity (TFC/Q)
• Short-Run Average Cost (SRAC) = (TVC + TFC) / Q

• Fixed Costs do not change with output in the short run (e.g., rent, machinery costs).
• Variable Costs change with output (e.g., raw materials, labor).
• The SRAC curve is U-shaped due to the law of diminishing marginal returns.