Multiple Choice
The cost per unit decreases as volume increases for which of the following cost behaviors?
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10. The Costs of Production
Cost-Minimizing Combination of Labor and Capital
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Which of the following best completes the statement: 'Variable total costs change with output, whereas fixed total costs do not.'?
A
Marginal
B
Variable
C
Fixed
D
Average
Verified step by step guidance1
Understand the definitions of cost types in microeconomics: Fixed costs are costs that do not change with the level of output, while variable costs change as output changes.
Recognize that the statement compares how total costs behave with changes in output: variable total costs vary with output, fixed total costs remain constant regardless of output.
Identify the key term that describes costs changing with output, which is 'Variable'.
Review the other options: 'Marginal' refers to the cost of producing one more unit, 'Fixed' costs do not change with output, and 'Average' costs are total costs divided by quantity produced.
Conclude that the best word to complete the statement is 'Variable' because it correctly describes costs that change with output.
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