Variable costs are those that
A)vary with output.
B)are fixed when output changes.
C)decrease when output increases.
D)vary with input.
E)can change even when output is constant.

Question

Quizplus · Accepted Answer

Variable costs are called so because they vary with the output or production level. As the production level increases, variable costs also increase and vice versa. This is in contrast to fixed costs, which remain constant regardless of the output level. Option B is incorrect because fixed costs do not change with the level of production. Option C is also incorrect because variable costs are expected to increase with an increase in production level, not decrease. Option D is incorrect as input costs may or may not be variable costs, depending on their relationship to production levels. Option E is incorrect as variable costs cannot change when output is constant, as they are directly related to production levels.

Variable Costs Are Those That