Question

How do variable costs per unit behave?(a) they decrease as production increases(b) they decrease as production decreases(c) they remain the same throughout production levels within the relevant range(d) they increase as production decreases

Answer 1

Answer:

The correct answer is option c.

Explanation:

Variable cost is the cost incurred on the variable factors. In the production process, to increase output more variable inputs are hired. So, the total variable cost will increase with an increase in production.

But the variable cost per unit is the variable cost incurred on a single unit of output. This will remain the same throughout the process and change only if there is a change in input prices.