Asked by Lehia Coloma on Jul 25, 2024
Verified
Average variable cost does NOT equal:
A) variable cost divided by output.
B) total cost minus fixed cost divided by output.
C) average total cost minus average fixed cost.
D) variable cost times output.
Average Variable Cost
The total variable costs of production divided by the quantity of output produced, representing the cost per unit of output.
Total Cost
The sum of all expenses incurred in the production of goods or services, including both fixed and variable costs.
Fixed Cost
Costs that do not change with the level of output or production, such as rent, salaries, and insurance, which are incurred regardless of business activity levels.
- Absorb the fundamentals of variable, fixed, and total costs pertinent to production activities.
- Measure the average fixed, variable, total, and border expenses.
Verified Answer
VE
Vlidor ElkavishJul 29, 2024
Final Answer :
D
Explanation :
D is incorrect because variable cost times output would give you the total variable cost, not the average variable cost. Average variable cost is calculated by dividing the variable cost by the quantity of output, not by multiplying them.
Learning Objectives
- Absorb the fundamentals of variable, fixed, and total costs pertinent to production activities.
- Measure the average fixed, variable, total, and border expenses.