Average variable cost is:
A) the firm's variable cost per unit multiplied by the quantity.
B) total variable cost divided by quantity.
C) the difference between average total cost and total variable cost.
D) the difference between total cost and total variable cost.

Question

Quizplus · Accepted Answer

Average variable cost is calculated by dividing total variable cost by the quantity produced. This gives the average cost of producing each unit, taking into account only the variable costs. Option A is incorrect because it multiplies the variable cost by the quantity, which gives total variable costs instead of average variable cost. Option C is incorrect because it confuses average variable cost with the difference between average total cost and total variable cost. Option D is incorrect because it confuses total cost with total variable cost.

Average Variable Cost Is