The total cost (TC) of producing computer software diskettes (Q) is given as: TC = 200 + 5Q. What is the variable cost?
A) 200
B) 5Q
C) 5
D) 5 + (200/Q)
E) none of the above

Question

Quizplus · Accepted Answer

Variable cost refers to the cost that changes with the change in quantity of output. In the given equation, the only term that changes with the change in quantity is 5Q, which represents the cost of producing one diskette. Hence, the variable cost is 5Q.

The Total Cost (TC) of Producing Computer Software Diskettes (Q)