Question

Variable costs are Question 8 options:

A) a production expense that changes with the quantity of output produced.

B) the amount by which a firm's cost changes if the firm produces one more unit of output.

C) equal to total cost divided by the units of output produced.

D) a production expense that does not vary with output.

Answer 1

Answer: A) Production expense that changes with the quantity of output produced .

Explanation: Variable cost is that part of 'Total Cost' of output production , which directly varies with the level of output .

Total Cost = Total Variable Cost + Total Fixed Cost

TVC since directly varying with level of output , is zero at zero level of output .

Eg - Cost of Raw Materials , Fuel etc

(This is unlikely Fixed Cost which is not related with output production & isn't 0 at 0 level of income , eg - cost of plant , machine )

Answer 2

The correct answer is option A.

Step-by-step explanation:

In the process of production, several inputs are used to create outputs. These inputs may or may not be varied in the short run. Those inputs that can be varied are called variable inputs, for instance, labor.

Those inputs that cannot be varied in the short run are called fixed inputs. For instance, capital, machinery, etc.

The cost incurred on variable inputs is called a variable cost. This cost changes with the change in the quantity of output produced. The quantity of output varies with the quantity of input employed and so does variable cost.