Which of the following is most likely to be a variable cost in the short run?
A)a fee paid to obtain a license
B)the energy cost of running a factory
C)the cost of owning machinery
D)rent payments for office space

Question

Quizplus · Accepted Answer

Variable costs are those that change with the level of output, and energy costs of running a factory are directly related to the level of output in the short run. Fees paid to obtain a license (choice A) and owning machinery (choice C) are fixed costs as they do not change with output level in the short run. Rent payments for office space (choice D) may or may not be a variable cost depending on the lease agreement, but it is less likely to be a variable cost compared to the energy cost of running a factory.

Which of the Following Is Most Likely to Be a Variable