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When the output is equal to zero, the variable cost is ______.
constant
zero
minimum
maximum
- When the output is zero, variable costs are also zero because they change with the level of output.
- Correct Answer: Option 2 - zero
- Variable costs are costs that vary directly with the level of output, such as materials and labor.
- If no goods are produced, there's no need for materials or production labor, hence variable costs will be zero.
- Option 1 (constant) is incorrect because fixed costs are constant, not variable costs.
- Option 3 (minimum) is incorrect because minimum implies there's some positive cost, which isn't true at zero output.
- Option 4 (maximum) is incorrect as variable costs cannot be maximum at zero output.
By: santosh ProfileResourcesReport error
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