PRC-3 · Chapter 12 · Question 50 of 69
Which of the following business expenses would definitively act as a 'Variable Cost'?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The cost of raw materials
Explanation
Variable costs fluctuate directly with production levels. If you produce zero, you buy zero raw materials; if you produce a million units, you buy massive amounts of raw materials.
More Firm Theory MCQs
- Q52In an oligopolistic market, what is the primary economic purpose of forming a 'Cartel'?
- Q53The Law of Diminishing Marginal Returns states that as more variable factors of production are added to a fixed factor:
- Q54Which of the following statements regarding short-run cost curves is mathematically correct?
- Q55When a firm's Average Cost (AC) is visibly rising on a graph, what must definitively be true about its Marginal Cost (MC)?
- Q56For a downward-sloping demand curve, the firm's Marginal Revenue (MR) is strictly greater than zero only if: