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प्रश्न
What would happen to the following type of cost as output is increased?
Average variable cost
लघु उत्तरीय
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उत्तर
- As output increases, the Average Variable Cost (AVC) initially declines, reaches a minimum, and then begins to rise.
- AVC = `"Total Variable Cost"/"Output"`
- Initially, AVC decreases due to better resource utilization and increased returns.
- After a certain point, due to diminishing returns (overuse of variable inputs), AVC starts rising.
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