Question

How do total variable costs behave?(a) the increase as production decreases(b) they decrease as production decreases(c) they decrease as production increases(d) they remain the same throughout production levels within the relevant range

Answer 1

(b) they decrease as production decreases

Step-by-step explanation:

The total variable cost will increase with the oputput and decrease with it.

At more units, more direct materials and more working hours (direct and variable cost) thus, more cost.

If units output decrease, then less materials are used and less working hours thus total variable cost decrease. This makes b statement correct.