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:
“You preferred it to the usual thing:
One dull man, dulling and uxorious,
One average mind—with one thought less, each year.”
—Ezra Pound (1885–1972)
“There is not so variable a thing in nature as a lady’s head-dress.”
—Joseph Addison (1672–1719)
“Apparently, a democracy is a place where numerous elections are held at great cost without issues and with interchangeable candidates.”
—Gore Vidal (b. 1925)