Average variable cost (AVC)
A)is the variable cost divided by the average sales price of the final good.
B)is the variable cost divided by the quantity of output produced.
C)is equal to average fixed cost (AFC)when no output is produced.
D)is always less than average fixed cost (AFC).

Question

Quizplus · Accepted Answer

AVC is the total variable cost divided by the quantity of output produced. Therefore, the correct answer is B. A is incorrect because it includes the sales price of the final good, which is not relevant to AVC. C is incorrect because AFC only exists when there is output produced. D is not always true as AFC and AVC may intersect at some point, where they are equal.

Average Variable Cost (AVC)