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How do you calculate average variable costs (AVC) in economics?

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Kristelle Balando
Kristelle BalandoLv10
5 Nov 2020
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Related questions

Use the following information to determine the total fixed costs (TFC), total variable costs (TVC), average fixed costs, (AFC) average variable costs (AVC), and marginal costs (MC).Ā 

Total Output Costs($) TFC TVC AFCĀ  AVC ATC MC
0 100 Ā  Ā  Ā  Ā  Ā  Ā 
1 150 Ā  Ā  Ā  Ā  Ā  Ā 
2 225 Ā  Ā  Ā  Ā  Ā  Ā 
3 230 Ā  Ā  Ā  Ā  Ā  Ā 
4 300 Ā  Ā  Ā  Ā  Ā  Ā 
5 400 Ā  Ā  Ā  Ā  Ā  Ā 

Ā 

Use the following information to calculate the total fixed costs, total variable costs,average fixed costs, average variable costs, average total costs and marginal costs.Ā 

Ā 

Total output

Costs

TFC

TVC

AFC

AVC

ATC

MC

0

$100

 Ā  Ā  Ā  Ā  Ā  Ā 

1

$150

 Ā  Ā  Ā  Ā  Ā  Ā 

2

$225

 Ā  Ā  Ā  Ā  Ā  Ā 

3

$230

 Ā  Ā  Ā  Ā  Ā  Ā 

4

$300

 Ā  Ā  Ā  Ā  Ā  Ā 

5

$400

 Ā  Ā  Ā  Ā  Ā  Ā 

Marginal cost may be much higher than average variable cost because:

A. MC includes fixed costs while AVC does not

B.Ā MC represents the variable cost of producing the last unit, which can be very steep if you are pushing the production system to its limit. Average variable cost is based on all of the units produced.

C.Ā AVC only includes labor while MC includes all variable costs

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