Total Variable Cost (TVC)

The costs that directly with the output, rising as more is produced and falling as less is produced, are called total variable costs. They are also referred as prime costs or Direct costs or Avoidable costs, Example of variable costs are: (i) wages of temporary laborers; (ii) raw material; (iii) fuel; (iv) Electric power, etc.

TVC = quantities of the variable productive service X factor price.

Total Variable cost is illustrated in the following table and diagram:

Units of Output                   TVC (Rs)
0                                              0

1                                             180

2                                             300

3                                             400

4                                             520

5                                             650

6                                             820

7                                           1060

8                                           1400

Our above table and diagram speak that total cost varies directly with the volume of output. TVC curve form the origin, up to a certain range it remains concave from below and then it become convex. It shows that in the beginning total variable cost rises at a diminishing rate and thereafter it rises at an increasing rate.

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