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Basic Question 10 of 29
A firm's variable costs ______
B. are dependent upon the level of fixed costs in the long run.
C. are always equal to the company's total average costs in the long run.
D. are determined by the quantity of output it produces.
E. decrease as output increases.
A. directly reflect the price of the company's outputs.
B. are dependent upon the level of fixed costs in the long run.
C. are always equal to the company's total average costs in the long run.
D. are determined by the quantity of output it produces.
E. decrease as output increases.
User Contributed Comments 5
| User | Comment |
|---|---|
| bahodir | What about answer A? Is it wrong? |
| ljamieson | A is wrong because price of an output is determined by the market. It is external to the cost of production. |
| mikeburns | E is correct, but only in the short run -- in the long run, variable costs increase due to law of diminishing returns |
| granbois | No the variable cost is not supposed to change - by definition. |
| ascruggs92 | Mikeburns, that's false it's not about short term or long run, it's about quantity produced, and VC increases or decreases depending on the current level of production. In the long run, all costs are variable. granbois, you're thinking of fixed costs, hence the name "fixed." Variable costs can and always do change |
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Learning Outcome Statements
determine and interpret break even and shutdown points of production, as well as how economies and diseconomies of scale affect costs under perfect and imperfect competition
CFA® 2024 Level I Curriculum, Volume 1, Module 1.