Question

37. Electricity charges, sales tax etc are example of
(1.5 Points)
cost. I
O A. Fixed cost
O B. Variable cost
OC. Private cost
OD. Social cost

Answer 1

Answer:

B. Variable cost

Explanation:

Variable costs change directly with the output – when output is zero, the variable cost will be zero.

A common example of variable costs is operational expenses that may increase or decrease based on the business activity. A growing business may incur more operating costs such as the wages of part-time staff hired for specific projects or a rise in the cost of utilities – such as electricity, gas or water.

Hope this helps!

Answer 2

Electricity charges, sales tax etc are example of variable cost.

1. Fixed cost is the cost that is incurred irrespective of whether production takes place or not. Such costs include land rent, machinery cost etc.
2. Variable cost is the cost that varies with the production level. higher the production level higher will be the variable cost. E.g. sales tax, electricity charges etc.
3. Private cost is the cost which is incurred by the entrepreneur or the business firm on the purchase of goods and services. E.g. cost on purchase of labor , machinery etc.
4. Social cost is the cost which includes private cost as well as external cost. it is borne by society and for some part of it society might not even get compensation. For e.g cost of pollution from factories