Which cost increases continuously with the increase in production?
Options
AAverage cost
BMarginal cost
CFixed cost
DVariable cost
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Theory of Production and CostPYQ - June 2022Question 50 of 20
All Questions Correct Answer
✅ Option d — Variable cost
All Options:
- AAverage cost
- BMarginal cost
- CFixed cost
- DVariable cost
About This Chapter: Theory of Production and Cost
Paper
Paper 4: Business Economics
Weightage
10%
Key Topics
Function, Cost Concepts (Short/Long Run)
This chapter explores how firms produce goods and services. It covers Production Functions, the Laws of Returns (Increasing, Constant, Diminishing), and all cost concepts including Total Cost, Average Cost, Marginal Cost, Fixed Cost, and Variable Cost. Understanding why the AC and MC curves are U-shaped is crucial for exam success.
View Official ICAI SyllabusExam Strategy Tip
The relationship between MC and AC curves is a favorite examiner topic. Remember: MC cuts AC at its minimum point. Also focus on the difference between Short Run and Long Run cost curves.
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