Question

The amount of money that a firm pays to buy variable inputs is called

Select one:

a. Variable cost

b. Marginal cost.

c. Total cost.

d. Fixed cost.

Answer 1

Variable input is a factor of production, when production increases the utilisation of variable inputs also Increase. Variable inputs are especially material and labor inputs.

Cost of material and labor are treated as variable cost, because as change in production material and labor cost also changes. Hence, option a is correct, the amount of money that the firm pay to buy a variable inputs is called as variable cost.

Cost of variable inputs are not called as fixed cost, total cost and marginal cost. Cost of variable inputs are called as variable cost.