Which of the Following Statements Is CORRECT with Respect to Variable

question 34

Multiple Choice

Which of the following statements is CORRECT with respect to variable cost per unit, within the relevant range?

• A) It will increase as production decreases.
• B) It will decrease as production decreases.
• C) It will remain the same as production levels change.
• D) It will decrease as production increases.

---

Definitions:

Income Effect

The change in an individual's consumption resulting from a change in their real income, affecting their purchasing power.

Normal Good

A type of good for which demand increases as the income of individuals or the economy grows.

Substitution Effect

The substitution effect occurs when consumers replace more expensive items with less costly alternatives.

Income Effect

A change in the quantity demanded of a good or service as a result of a change in real income (purchasing power).