Final answer:
The average variable cost for a firm producing Q units is calculated using its AVC function, AVC = a + bQ + cQ^2, which represents the variable costs relative to output levels.
Step-by-step explanation:
To calculate the average variable cost (AVC) for a firm that produces Q units, you would use the given AVC function AVC = a + bQ + cQ². This AVC function represents the shape of variable costs as they change with different levels of output. The total fixed cost provided, $1,500, is not used in calculating the AVC, which considers only variable costs.
The AVC function indicates that the cost of producing each additional unit changes as production increases. This behavior of costs often forms a U-shaped curve, meaning that the average variable cost decreases initially with increases in output, reaches a minimum point, and then increases after that point. A firm is likely to earn profits if its average variable cost is lower than the market price, excluding consideration of fixed costs from the profitability evaluation.