Q8
Which of the following costs will
increase or decrease with increase in
production?
Ops: A.
Financial Costs
B.
All of the mentioned options
C.
Marginal Cost
D.
Fixed Costs
Answers
Answer:
C. Marginal cost
Explanation:
As the marginal product of the variable input decreases, due to the law of diminishing marginal returns, a firm must hire increasingly more of the variable input to get the same increase in output.
Fixed costs do not vary with the production level. Total fixed costs remain the same, within the relevant range. However, the fixed cost per unit decreases as production increases, because the same fixed costs are spread over more units.
The total expenses associated with securing financing for a project or business arrangement. Financing costs may include interest payments, financing fees charged by intermediary financial institutions, and the fees or salaries of any personnel required to complete the financing process.