[amp_mcq option1=”Fixed cost” option2=”Variable cost” option3=”Average cost” option4=”Both A and B” correct=”option2″]<\/p>\n
The correct answer is: Both A and B<\/strong>.<\/p>\n Cost theory is the study of the costs that a firm incurs in producing its goods or services. These costs can be divided into two categories: fixed costs and variable costs.<\/p>\n Fixed costs are costs that do not change with the level of output. For example, a firm’s rent is a fixed cost, because it must pay the rent regardless of how much it produces.<\/p>\n Variable costs are costs that change with the level of output. For example, the cost of raw materials is a variable cost, because the firm will use more raw materials when it produces more goods.<\/p>\n Total cost is the sum of fixed costs and variable costs.<\/p>\n Average cost is total cost divided by the number of units produced.<\/p>\n Therefore, the cost theory is the study of total cost, which contains both fixed cost and variable cost.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”Fixed cost” option2=”Variable cost” option3=”Average cost” option4=”Both A and B” correct=”option2″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-57826","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n