PRC-2 · Chapter 2 · Question 13 of 45
If the total cost of producing 10 units is Rs. 500 and the total cost for producing 20 units is Rs. 800, what is the variable cost per unit assuming a linear relationship?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Rs. 30
Explanation
The variable cost represents the slope of the cost function. Variable cost = Change in Cost / Change in Units = (800 - 500) / (20 - 10) = 300 / 10 = Rs. 30 per unit.
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