Which of the following statements is true of variable costs incurred by firms?
A)These costs are independent of the number of goods produced by firms.
B)The rent and interest paid by firms are examples of variable costs.
C)These costs are the difference between what firms charge for their products and the fixed costs of the products.
D)These costs change directly with the units produced.
E)These costs are the total amount of margin made by a firm.

Question

Quizplus · Accepted Answer

Variable costs are costs that vary with production output. As more units are produced, more variable costs are incurred. Examples of variable costs include raw materials, direct labor expenses such as wages, and utilities. Option A is incorrect because variable costs change with the level of production. Option B is incorrect as rent and interest paid by firms are examples of fixed costs. Option C is incorrect as it confuses variable costs with the break-even point. Option E is incorrect as the total amount of margin made by a firm includes both variable and fixed costs.

Which of the Following Statements Is True of Variable Costs