In the short run,total variable cost
A) includes the cost of capital.
B) includes the cost of labor.
C) includes both the cost of capital and of labor.
D) does not change when production changes.
E) is positive when output is zero.

Question

Quizplus · Accepted Answer

Total variable cost includes the cost of inputs such as labor, raw materials, and utilities, which vary with the level of production. It does not include the cost of capital, which is a fixed cost. Additionally, in the short run, total variable cost will increase as production increases due to the law of diminishing returns. Total variable cost is also non-zero even when output is zero, as there may still be costs incurred for maintenance, rent, or other expenses.

In the Short Run,total Variable Cost