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Economic Terms

   

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Average propensity to consume

The proportion of income that consumers are likely to spend.

Average propensity to save

The proportion of income that consumers are likely to save.

Average Variable Costs (AVC)

The average variable cost per unit of output produced.

Below is an illustrated example of how to calculate the AVC for different levels of output for a hypothetical firm. These points can then be used to map out the AVC curve for this firm.

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