At zero output, which of the following cost is undefined?

The correct answer is Option 4: all of the above

At zero output (Q = 0), we analyze the behavior of each cost function:

1️⃣ Short-Run Average Cost (SAC)

• SAC = TC / Q (Total Cost divided by output)
• Since Total Cost (TC) = TFC + TVC, and at Q = 0, TC = TFC (as TVC is zero), dividing by zero makes SAC undefined.

2️⃣ Short-Run Marginal Cost (SMC) = ΔTC / ΔQ

• Marginal cost measures the change in total cost when output increases.
• If output is zero, the change in output (ΔQ) is also zero, making SMC undefined.

3️⃣ Average Fixed Cost (AFC)

• AFC = TFC / Q
• TFC is positive even at zero output, and dividing by zero results in infinity, which means AFC is undefined.