Which of These Would Be Considered a Variable Cost

question 62

Multiple Choice

Which of these would be considered a variable cost?

• A) cost of raw materials
• B) manager's salary
• C) local government rates
• D) rent

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Definitions:

Total Revenue

The sum of money a company earns from selling its products or services, prior to deducting any costs.

Elastic

Describes a situation in which the quantity demanded or supplied of a good or service changes significantly as its price changes.

Inelastic

A characteristic of goods whereby a change in price leads to a relatively smaller change in the quantity demanded or supplied.

Total-revenue Test

A method used to determine the price elasticity of demand by observing changes in total revenue as a result of price alterations.