Average Variable Cost

Definition

Average variable cost represents the variable cost per unit of output produced, calculated by dividing total variable cost by the quantity of output. It excludes fixed costs.

Related terms

Marginal Cost Curve: The marginal cost curve shows how marginal costs change as production levels increase or decrease.

Variable Costs: Variable costs are expenses that change with changes in production levels, such as raw materials or labor.

Short-run Costs: Short-run costs refer to expenses that can be adjusted within a shorter time frame, typically involving only variable costs.