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Within the relevant range, what will happen to the variable cost per unit?

1) Increase
2) Decrease
3) Remain constant
4) Cannot be determined

1 Answer

1 vote

Final answer:

The variable cost per unit will remain constant within the relevant range, as these costs, like labor and raw materials, change with the production output yet stay consistent on a per-unit basis.

Step-by-step explanation:

Within the relevant range, the variable cost per unit will remain constant. Variable costs are those expenses that vary directly with the production output. Examples of variable costs include costs for labor and raw materials, which change with the level of production. When we speak about variable cost per unit, we're referring to the cost for each additional unit produced and it is generally constant as it pertains to the per-unit cost, while the total variable cost will vary with the level of output.

The numerical calculations behind average cost, average variable cost, and marginal cost may differ from one firm to another, but the conceptual understanding of these costs - particularly that the variable cost per unit remains constant within the relevant range of production - does not change.

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