In order to determine option D. average cost the firm's total costs must be divided by the quantity of its output. Read below about the concept of average cost.
Average total cost (ATC) is calculated by dividing total cost by the total quantity produced. The average total cost curve is typically U-shaped. Average variable cost (AVC) is calculated by dividing variable cost by the quantity produced.
Therefore, the correct answer is option D. average cost
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The complete question goes thus:
In order to determine ____________, the firm's total costs must be divided by the quantity of its output.
A. diminishing marginal returns
B. fixed costs
C. variable cost
D. average cost
