Question

Which of the following is most likely to be a variable cost for a firm?

Group of answer choices

a) the interest payments made on loans

b) the franchiser's fee that a restaurant must pay to the national restaurant chain.

c) the payroll taxes that are paid on employee wages

d) the monthly rent on office space that it leased for a year

Answer 1

Ans: c) the payroll taxes that are paid on employee wages

Explanation:

Variable cost for a firm is directly related to its level of production. It means variable cost of a firm increases when the level of production increases and vice versa. Fixed costs are available even at zero level of production. In the above case,the payroll taxes that are paid on employee wages is most likely to be a variable cost for a firm.