Average variable cost equals
A) total fixed cost plus total variable cost.
B) average total cost minus average fixed cost.
C) average total cost plus average fixed cost.
D) total cost minus average cost.

Question

Quizplus · Accepted Answer

The formula for average variable cost is AVC = VC/Q, where VC is variable cost and Q is quantity. Therefore, average variable cost is only affected by the variable cost and quantity produced in the short run, and not by fixed costs. Thus, the correct formula for average variable cost is AVC = VC/Q. As a result, the answer is B, average total cost minus average fixed cost.

Average Variable Cost Equals