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Which of the following statements is true of the behavior of total variable costs, within the relevant range?

A) They will decrease as production increases.
B) They will remain the same as production levels change.
C) They will decrease as production decreases.
D) They will increase as production decreases.

1 Answer

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Final answer:

The true statement about the behavior of total variable costs within the relevant range is that they decrease as production decreases, because these costs are directly related to the level of production.

Step-by-step explanation:

Among the given statements about the behavior of total variable costs within the relevant range, option C is correct: They will decrease as production decreases. Variable costs are expenses that change in proportion to the activity of a business. In this context, variable costs are directly tied to production levels.

These costs primarily include items such as raw materials and labor that are essential for production. When more products are made, more materials and labor hours are typically required, increasing the variable costs. Conversely, if production is reduced, fewer materials and less labor are needed, which leads to a decrease in variable costs. Therefore, it is expected that total variable costs will vary in direct proportion to the level of production.

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