Variable costs are
A)the same as sunk costs
B)irrelevant to decision making,because they are sunk
C)the costs of inputs that vary with the level of production
D)the costs of inputs that do not vary with the level of production
E)the additional total cost associated with producing an additional unit of output

Question

Quizplus · Accepted Answer

Variable costs are costs that vary with the level of production, such as the cost of raw materials or direct labor. They are important in decision making because they can help determine the profitability of producing more or less output. Sunk costs, on the other hand, are costs that have already been incurred and cannot be recovered, and are therefore irrelevant to decision making. Option D describes fixed costs, which do not vary with the level of production. Option E describes marginal costs, which are the additional costs associated with producing one more unit of output.

Variable Costs Are