Light

Average Variable Cost (AVC)

Definition

Average variable cost (AVC) is obtained by dividing total variable cost by the quantity produced. It shows how much each unit of output contributes to covering variable costs.

Related terms

Total Variable Cost: Total variable cost is the sum of all costs that vary with production levels.

Marginal Cost: Marginal cost represents the additional expense incurred from producing one more unit of output.

Average Fixed Cost (AFC): AFC is calculated by dividing total fixed cost by quantity produced. It shows how much each unit contributes towards covering fixed costs.

"Average Variable Cost (AVC)" appears in:

Study guides (2)

AP Microeconomics - 3.2 Short-Run Production Costs
AP Microeconomics - 3.6 Firms' Short-Run Decisions to Produce and Long-Run Decisions to Enter or Exit a Market

Practice Questions (3)

Which cost curve intersects both the average variable cost (AVC) and average total cost (ATC) at their minimum points?
What is the relationship between average total cost (ATC) and average variable cost (AVC) as quantity increases?
A company experiences a decrease in its average fixed cost (AFC) while its average variable cost (AVC) remains unchanged. Which of the following factors is most likely responsible for this change?

Are you a college student?

Study guides for the entire semester
200k practice questions
Glossary of 50k key terms - memorize important vocab

About Us

About Fiveable

Blog

Careers

Code of Conduct

CCPA Privacy Policy

Resources

Cram Mode

AP Score Calculators

Study Guides

Practice Quizzes

Glossary

Cram Events

Merch Shop

Crisis Text Line

Help Center

Stay Connected

© 2024 Fiveable Inc. All rights reserved.

AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.