Variable Costs Are to Fixed Costs as

question 11

Multiple Choice

Variable costs are to fixed costs as

• A) electric bills are to monthly rent charges.
• B) monthly rent charges are to electric bills.
• C) costs incurred are to future costs.
• D) liability insurance costs are to salaries.

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Definitions:

Average Variable Cost

The cost a company incurs to produce one additional unit of a product, calculated by dividing the total variable costs by the number of units produced.

Average Variable Cost

The cost per unit of variable inputs (like labor or materials) for producing a good, which changes with the level of output.

Fixed Cost

Costs that do not vary with the level of output or production, such as rent, salaries, or insurance.

Average Fixed Cost

The fixed costs of production divided by the quantity of output produced, illustrating how fixed costs dilute over larger production volumes.