Average variable cost

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.

$\text{AVC} = \frac{\text{VC}}{\text{Q}}$

Where:

• VC = Variable Cost
• AVC = Average Variable Cost
• Q = Quantity of Output Produced

Average variable cost plus average fixed cost equals average total cost:

AVC + AFC = ATC.

Short run average variable cost equals the wage rate, w, divided by the average product of labor, AP_L

See also

• Variable cost
• Fixed cost
• Cost curve