1. This will cause average variable cost to fall.

2. Average variable cost(AVC): is total variable cost per unit of output.

3. The influence of average variable cost is reflected in its U shape.

4. It is drawn to intersect both average total cost and average variable cost at their lowest points.

5. If the price is between average total cost and average variable cost at the profit-maximizing output, then the firm is said to be in a loss-minimizing condition.

6. The portion of the marginal-cost curve that lies above average variable cost is the competitive firm's short-run supply curve.