Variable Costs

Variable costs are costs that change in relation to the amount of goods or services produced. They are also known as unit-level costs, as they are directly related to the number of units produced. Examples of variable costs include raw materials, direct labor, and commissions. Variable costs are in contrast to fixed costs, which remain the same regardless of production output.

History of Variable Costs

The concept of variable costs has been around since the early days of economics. In the late 19th century, economists began to recognize the importance of understanding the relationship between production and costs. This led to the development of the concept of variable costs, which are costs that vary with the amount of output produced. This concept was further developed in the early 20th century, when economists began to recognize the importance of understanding the relationship between production and costs in order to make better decisions about production.

Since then, the concept of variable costs has become an important part of economic theory and is used in a variety of contexts. For example, it is used to analyze the cost structure of a business, to determine the optimal level of production, and to make decisions about pricing and production.

Comparison of Variable Costs

Summary

Variable costs are costs that change in relation to the amount of goods or services produced. They are in contrast to fixed costs, which remain the same regardless of production output. The concept of variable costs has been around since the early days of economics and is used in a variety of contexts. For more information about variable costs, visit websites such as Investopedia, The Balance, and Business Insider.

See Also

• Fixed Costs
• Cost Structure
• Production Output
• Pricing
• Production Decisions
• Cost-Benefit Analysis
• Marginal Cost
• Average Cost
• Opportunity Cost
• Economies of Scale

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