Variable Costs

question 41

Multiple Choice

Variable costs

• A)vary in total as activity varies.
• B)vary on a per unit basis as activity varies.
• C)are unpredictable.
• D)none of the above.

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Definitions:

Labor

The effort involving both mental and physical capacities of humans utilized in creating goods and services.

Marginal Productivity Theory

A principle in economics that states the compensation of a factor of production, like labor, depends on the marginal productivity of that factor.

Perfectly Competitive

Refers to markets that meet the criteria of perfect competition, ensuring no single buyer or seller can influence prices or market conditions.

Diminishing Returns

A decrease in the marginal output of a production process as the amount of a single factor of production is incrementally increased, holding all other factors constant.