Question

The cost of advertising is part of the firm's _______ costs and if advertising enables the firm to sell a greater output, its average total cost _______

Answer 1

The cost of advertising is part of the firm's variable cost and if advertising enables the firm to sell a greater output, its average total cost does not change.

Variable costs are dependent on the  production output and  sales. The variable cost of production is a constant amount per unit produced.

As the volume of production and output increases, variable costs will also increase. Alternatively,  when fewer products are produced, the variable costs associated with production will consequently decrease.

Different examples of variable costs are sales commissions, cost of raw material, direct labor costs,  used in production, and utility costs.

To know more about variable costs here:

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