As a firm expands its output from zero:

Question

Quizplus · Accepted Answer

As the firm expands its output from zero, it has to pay wages, rent, and electricity to cover the variable costs. These costs increase as the firm hires more workers and produces more goods or services. Thus, choice C is the best answer. Marginal wage of labor may increase initially, but it may eventually decrease due to diminishing marginal returns. The firm may experience economies or diseconomies of scale depending on how effectively it manages its resources. However, these factors are not directly related to the firm's variable costs. Therefore, choices A and B are not the best answers. Choice D is wrong because there is a change in the cost occurring as the firm expands its output.

As a Firm Expands Its Output from Zero