average variable cost definition economics
In economics, average variable cost (AVC) is a firm's variable costs (labor, electricity, etc.) divided by the quantity of output produced.Variable costs are those costs which vary with output. where VC = variable cost, AVC = average variable cost, and Q = quantity of output produced.Average variable cost plus average fixed cost equals average total cost :A firm would choose to shut down if marginal revenue is below average variable cost at the profit-maximizing positive level of output.verage variable cost plus average fixed cost equals average total cost : A firm would choose to shut down if marginal revenue is below average variable cost at the profit-maximizing positive level of output.