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Avoidable costs

Updated: Aug 20, 2021

Those costs of production which would not be incurred if a given output were not produced. They are colosely related to variable costs or prime costs. However, total avoidable costs need not equal total variable costs, since, if a firm ceased production of a good altogether, it might ‘avoid’ costs which must be incurrred if any output is to be produced but which do not vary with output, e.g. lump-sum royalty payments on a particular process.

Reference: The Penguin Business Dictionary, 3rd edt.

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