Total variable
cost curve reflects the law of variable proportions. According to this
law at the initial stages of production with the given factory more
of the variable factors are employed, its productivity increases and
the average variable cost falls. This continues until the optimum combination
of the fixed&variable factors are reached. Beyond this point as
increased quantities of the variable factors are combined with the fixed
factors the productivity of the variable factor declines and the average
variable cost rises.
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