A final word on Variable Cost. Marginal Cost gives the added cost of each additional unit produced, so if we add up the MC associated with each unit produced up to some level of output the total is the Total Variable Cost for that level of output. Graphically this is shown as the area under the MC to the left of the output.

   To the right we show Total Variable Cost when output is Q₁ as the area under the MC curve to the left of Q₁. We also show an area of equal size using a rectangle whose height is AVC₁ and whose width is Q₁, as we did on page 1.

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