Average variable cost (AVC) is an economics term that refers to a firm's variable costs (labor, electricity, etc.) divided by the quantity (Q) of output produced. Variable costs are those costs which vary with output.
Where:
- VC = Variable Cost
- AVC = Average Variable Cost
- Q = Quantity of Output Produced
Average variable cost plus average fixed cost equals average total cost:
Short run average variable cost equals the wage rate, w, divided by the average product of labor, APL
Famous quotes containing the words average, variable and/or cost:
“The average Hollywood film star’s ambition is to be admired by an American, courted by an Italian, married to an Englishman and have a French boyfriend.”
—Katharine Hepburn (b. 1909)
“Walked forth to ease my pain
Along the shore of silver streaming Thames,
Whose rutty bank, the which his river hems,
Was painted all with variable flowers,”
—Edmund Spenser (1552?–1599)
“Life! Life! Don’t let us go to life for our fulfilment or our experience. It is a thing narrowed by circumstances, incoherent in its utterance, and without that fine correspondence of form and spirit which is the only thing that can satisfy the artistic and critical temperament. It makes us pay too high a price for its wares, and we purchase the meanest of its secrets at a cost that is monstrous and infinite.”
—Oscar Wilde (1854–1900)