Please explain why, check the picture: This is about average variable cost Why does as output increases, average variable cost initially declines and eventuallybegins to increase?

In an economy, the cost is analyzed in different ways, such as total cost, marginal cost, average…

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Why does as output increases, average variable cost initially declines and eventually begins to increase?

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Proudction Costs

Section: Chapter Questions

Problem 7SQP

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Please explain why, check the picture:

This is about average variable cost

Why does as output increases, average variable cost initially declines and eventually
begins to increase?

Definition Definition Measure of the cost of production per unit of output, including only variable costs such as wages, materials, and utilities. AVC is calculated by dividing total variable cost by the number of units produced. Understanding average variable cost is important for businesses to make decisions on pricing, production levels, and profitability.

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