Cost Of Production and Concept of Revenue — Economics STD 11 Commerce — Question
Gujarat BoardEnglish MediumSTD 11 CommerceEconomicsCost Of Production and Concept of Revenue2 Marks
Question
What is variable cost ?
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Answer
When the production increases the cost increases, production decreases the cost decreases that means variable cost is the cost of production which varies directly with production.
It is zero when production is zero.
Variable cost consists of expenses on raw materials, power used in production, fuel changes, wages of casual workers etc.
The variable cost is also called "Prime cost ".
It is related to production and it is very useful in decision – making for the firm.
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