Statement I: Variable costs vary with output.
Statement II: Fixed costs don't vary with output.

Question

Quizplus · Accepted Answer

This is a basic concept in economics. Variable costs, such as the cost of raw materials, labor, or electricity, will increase or decrease as the level of output increases or decreases. Fixed costs, like rent or lease payments, insurance, or salaries of permanent staff, remain the same regardless of output changes. Therefore, Statement I is true and Statement II is also true.

Statement I: Variable Costs Vary with Output