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average cost

   Also found in: Dictionary/thesaurus, Medical, Wikipedia, Hutchinson 0.06 sec.
Average cost
In the context of investing, refers to the average cost of shares or stock bought at different prices over time.
average cost
A cost amount calculated by dividing the total cost by the units of production. Thus, if a firm produces 10,000 units of output for a total cost of $25,000, the average cost of each unit is $25,000/10,000 units, or $2.50 per unit. Average cost is made up of costs remaining unchanged throughout a range of output and costs varying directly with output. Firms with the lowest average cost in an industry have a competitive advantage in the event of severe competition and price cutting.


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