Variable Costs

question 158

Multiple Choice

Variable costs:

• A) exist only in the short run.
• B) change as output changes.
• C) are positive even when a firm produces no output.
• D) do not vary with output.

---

Definitions:

Marginal Cost

The cost of producing one more unit of a good or service, often key to determining the optimal level of production.

Competitive Market

A market structure characterized by a large number of buyers and sellers, free entry and exit, and products that are similar enough to be considered substitutes.

Nonexcludable

A characteristic of a good or service that prevents individuals who have not paid for it from being easily excluded from its consumption or use.

Nonrival

A characteristic of goods where one person's consumption does not diminish the ability of others to consume the same good.