ECONOMICS

Detailed explanation-1: -A business needs to make at least normal profit in the long run to justify remaining in an industry but in the short run a firm will continue to produce as long as total revenue covers total variable costs or price per unit > or equal to average variable cost (AR = AVC). This is called the short-run shutdown price.

Detailed explanation-2: -Average Variable Cost (AVC)= VC/Q VC is the Variable Cost, Q is the quantity of output produced.

Detailed explanation-3: -Average cost (AC), also known as average total cost (ATC), is the average cost per unit of output. To find it, divide the total cost (TC) by the quantity the firm is producing (Q).

Detailed explanation-4: -Variable costs are the sum of all labor and materials required to produce a unit of your product. Your total variable cost is equal to the variable cost per unit, multiplied by the number of units produced. Your average variable cost is equal to your total variable cost, divided by the number of units produced.