Variable Costs Are Production Costs That Vary with

question 68

Multiple Choice

Variable costs are production costs that vary with

• A) fluctuations in resource costs.
• B) changes in quantities of inputs purchased.
• C) quantity of output produced.
• D) energy and oil prices.

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Definitions:

Price of Capital

The cost of using capital for production, often measured by the interest rate on borrowed funds or the rate of return required on investment.

Price of Labor

The wages or salary paid to workers for their services, often determined by supply and demand in the labor market.

Least-Cost Rule

A principle suggesting that the most efficient way to achieve a desired level of output is by minimizing the cost of input resources.

Unit Cost

The calculated cost to produce one unit of a product, taking into account all relevant production expenses.