Short-run costs that increase and decrease as an output increases or decreases are called ________ costs.
A) variable
B) secondary
C) derived
D) partial
E) potential

Question

Quizplus · Accepted Answer

Variable costs are costs that increase and decrease as output increases or decreases. This is because they are directly tied to the level of production and include costs such as raw materials, labor, and utilities. Secondary costs refer to costs that are not directly tied to production levels, derived costs refer to costs that are indirectly related to production (such as rent on a factory building), partial costs is not a known term in economics, and potential costs are hypothetical costs that may or may not occur.

Short-Run Costs That Increase and Decrease as an Output Increases