Because the amount of labor a firm employs can be changed,the cost of labor is known as
A) minimum cost.
B) variable cost.
C) maximum cost.
D) fixed cost.
E) an unavoidable cost.

Question

Quizplus · Accepted Answer

Variable costs are costs that vary with the level of production or output. Since the amount of labor a firm employs can be changed, the cost of labor is a variable cost. Option A (minimum cost) and Option C (maximum cost) do not accurately describe the cost of labor. Option D (fixed cost) would refer to costs that do not vary with the level of production, such as rent or salaries of top management. Option E (an unavoidable cost) is a vague term and does not accurately describe the cost of labor.

Because the Amount of Labor a Firm Employs Can Be