Variable costs are the costs of ________.
A) raw materials and labor
B) the last unit of production
C) rent and equipment
D) all expenses incurred by the firm

Question

Quizplus · Accepted Answer

Variable costs are the costs that vary with the level of production, such as raw materials and labor. They increase as production increases and decrease as production decreases. Option B is incorrect because the cost of the last unit of production is the marginal cost, which may include both variable and fixed costs. Option C is incorrect because rent and equipment are fixed costs, which do not vary with the level of production. Option D is also incorrect because variable costs do not include all expenses incurred by the firm, only those that vary with production levels.

Variable Costs Are the Costs of ________