Question

Which of the following statements is true of variable costs incurred by firms? Multiple Choice

1. These costs are independent of the number of goods produced by firms.
2. The rent and interest paid by firms are examples of variable costs.
3. These costs are the difference between what firms charge for their products and the fixed costs of the products. 4. These costs change directly with the units produced.

Answer 1

Variable costs change directly with the units produced.

Step-by-step explanation:

Variable costs are the costs of the variable inputs, such as labor and raw materials. These costs change directly with the units produced. When a firm produces more goods, it typically requires more workers or more work hours, which increases labor costs. Similarly, producing a greater quantity of a product requires more raw materials, increasing raw material costs. Therefore, option 4 is the correct statement.