Variable Costs Are Costs That

question 14

Multiple Choice

Variable costs are costs that:

• A) vary inversely with changes in activity.
• B) vary directly with changes in activity.
• C) remain constant as activity changes.
• D) decrease on a per-unit basis as activity increases.
• E) increase on a per-unit basis as activity increases.

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Definitions:

Marginal Cost Curve

A visual display illustrating the variation in the expense of manufacturing an extra item of a product as the quantity produced alters.

Peak Efficiency

The state of operation where a system or process achieves its maximum productivity with minimal waste and effort.

Break-Even Point

The point at which total costs and total revenues are equal, resulting in no net loss or gain for the business.

Long Run

In economics, the long run refers to the period during which all factors of production and costs are variable, allowing for full adjustment to changes in the market or economy.