Which of the following would be a likely mathematical expression for total variable cost in terms of output (Q)?

• A. TVC = wL
• B. TVC = FC + Q
• C. TVC = MC imes Q
• D. TVC = P imes Q

Answer: (A)

Verified step by step guidance

1. Understand that Total Variable Cost (TVC) represents the costs that vary directly with the level of output produced, such as labor or raw materials.
2. Recall that TVC can be expressed as the product of the variable input quantity and its price. For example, if labor (L) is the variable input and w is the wage rate, then TVC = w \times L.
3. Recognize that TVC is not equal to Fixed Cost (FC) plus output (Q), because fixed costs do not vary with output and adding Q directly to FC does not represent cost properly.
4. Understand that TVC is not simply Marginal Cost (MC) times output (Q), because MC is the cost of producing one additional unit, and total variable cost is the sum of all variable costs, which may not be linear.
5. Note that TVC is not equal to price (P) times output (Q), since price times quantity represents total revenue, not cost.