20.2.3. Based on Behavior

Try these first

1. 1.

   Define fixed costs and give one example.

   Hint

   Think about costs that remain constant every month.

2. 2.

   What are variable costs? Provide one example.

   Hint

   Consider costs that vary with how much you produce.

3. 3.

   What type of cost remains unchanged in the short term?

   • Variable Costs
   • Fixed Costs
   • Semi-variable Costs

   Hint

   Think about costs that don't change with how much output you have.

4. 4.

   Do variable costs increase or decrease when production rises?

   • Increase
   • Decrease

   Hint

   Consider what happens each time you make another unit.

5. 5.

   A company produces 1000 units at a total variable cost of ₹30,000 and has fixed costs of ₹20,000. If production increases to 1500 units, what will be the total cost?

   Hint

   First, find the variable cost per unit, then apply it to the new production level.

6. 6.

   If a business has total costs of ₹50,000, consisting of fixed costs of ₹20,000 and variable costs, how would you calculate the variable costs given a production level of 400 units?

   Hint

   Think about isolating variable costs from total costs.