Suppose a publisher faces the following costs of producing 10,000 newspapers each month: $5,500 cost of labor; $2,200 monthly mortgage payment; $250 cost of electricity to run the printing presses; $800 for ink and paper; and $200 in city property taxes (based on the value of the building and land). Its total variable costs are:
A) $8,950.
B) $8,750.
C) $6,550.
D) $6,300.

Question

Quizplus · Accepted Answer

Variable costs change with the level of output, which in this case include the cost of labor ($5,500), electricity ($250), and ink and paper ($800). Adding these together gives $6,550. Mortgage payments and property taxes are fixed costs, not variable.

Suppose a Publisher Faces the Following Costs of Producing 10,000