(Answered) Average variable cost (AVC) is total variable cost per unit of output.Question 19 options:TrueFalse

➤ Why does AVC typically fall and then rise as output increases?
AVC often falls at low output because added variable inputs raise productivity, spreading variable cost over more units. After a point, diminishing marginal returns lower marginal product, so additional units require proportionally more variable input and AVC rises. This U-shape reflects input efficiency changes rather than fixed cost spreading.