Average variable cost equals
A) TC/Q.
B) TVC/Q.
C) TFC/Q.
D) change in total cost/change in output.

Question

Quizplus · Accepted Answer

The average variable cost (AVC) is the total variable cost (TVC) divided by the quantity produced (Q). Therefore, the correct formula for AVC is TVC/Q. Option A, TC/Q, includes fixed cost in the calculation, which does not vary with the level of output. Option C, TFC/Q, is the formula for average fixed cost. Option D is the formula for marginal cost, not for average variable cost.

Average Variable Cost Equals