Variable costs are expenses that change in direct proportion to the level of production or output. They vary depending on the quantity of goods or services produced.
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Fixed Costs: Fixed costs are expenses that do not change with the level of production. They remain constant regardless of how many units are produced.
Marginal Cost: Marginal cost refers to the additional cost incurred by producing one more unit of a good or service.
Average Variable Cost (AVC): AVC is calculated by dividing total variable costs by the quantity of output produced, giving an average measure of variable cost per unit.