Marginal Cost and Average Variable Cost Curves    To the right is a typical Average Variable Cost (AVC) curve shown with a MC curve.

   It may be helpful to keep in mind that Average Variable Cost (AVC) and Marginal Costs are two different ways of viewing variable costs.

   AVC is simply variable costs divided by output.

   One way of thinking of the relationship between AVC and MC is to think of MC as the most recent cost, or the cost of the last unit produced. If the cost of the last unit produced was below the average variable cost, it will bring the average down and vice versa.

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