Question

Which one of the following is true? The total variable cost is equal to:

• A. The average variable cost × quantity
• B. The average variable cost / quantity
• C. The marginal variable cost × quantity
• D. The marginal variable cost / quantity

Hint:

TVC is derived from multiplying AVC by the quantity of output.

Answer 1

The Correct Option is A

Step 1: Understand total variable cost (TVC).
Total variable cost refers to the cost incurred due to the variable factors of production (e.g., labor, raw materials) as output increases. It changes with the level of production.
Step 2: Relationship between total variable cost and average variable cost.
Total variable cost (TVC) is calculated by multiplying the average variable cost (AVC) by the quantity of output produced: \[ TVC = AVC \times \text{Quantity}. \]
Step 3: Conclusion.
Thus, the correct answer is (A) The total variable cost is equal to the average variable cost multiplied by quantity. Final Answer: \[ \boxed{\text{The total variable cost is equal to average variable cost × quantity.}} \]