Question

State whether the following is True or False. Give a reason for your answer.

TVC is an avoidable cost.

Options

• True

• False

Answer 1

This statement is True.

Explanation:

TVC or Total Variable Cost, is an avoidable cost since it changes with production level, increasing as output increases and vice versa. If production stops, variable costs can be totally avoided, compared to fixed costs, which are incurred regardless of output level.