Economists use the term variable costs to refer to
A) prices of inputs that are subject to sudden change,like fuel.
B) an increase in the price of any input.
C) costs that vary with the type of final product being produced.
D) costs that vary with the quantity of output produced.

Question

Quizplus · Accepted Answer

Variable costs are costs that vary with the quantity of output produced. These costs include inputs such as raw materials, electricity, and labor. As the level of output increases or decreases, the variable costs also change accordingly. Therefore, option D is the best choice. Options A, B, and C are incorrect because they do not fully capture the definition of variable costs. Option A refers to a specific type of input that can affect variable costs, but not all variable costs are related to fuel prices. Option B refers to an increase in the price of any input, which may or may not be a variable cost. Option C is also incorrect because product differentiation is not the defining characteristic of variable costs.

Economists Use the Term Variable Costs to Refer to