Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Production and Costs

Question:

Average variable cost at some level of output is the average of all marginal costs up to that level.
Is this statement true?

Options:

Yes

No

Maybe yes

Partially Correct

Correct Answer:

Yes

Explanation:

The correct answer is option 1: Yes

Here's why:

  • Average Variable Cost (AVC): AVC is calculated as Total Variable Cost (TVC) divided by the quantity of output (Q): AVC = TVC / Q.
  • Marginal Cost (MC): MC is the change in TVC resulting from producing one additional unit of output.
  • TVC: TVC is the sum of all marginal costs up to that level of output.
  • Therefore, AVC = (Sum of MC) / Q, which means AVC is the average of all marginal costs up to that level of output.