Variable costs rise when a firm increases its production of goods and services.

Question

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Variable costs are expenses that change in proportion to the level of production or sales. As production increases, variable costs also increase. This is because the costs associated with producing each additional unit of output, such as labor, raw materials, and energy, also increase. Therefore, when a firm increases its production of goods and services, its variable costs will rise accordingly.

Variable Costs Rise When a Firm Increases Its Production of Goods