ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Answer and Explanation: The correct answer is variable cost.

Detailed explanation-2: -For example, the packaging costs associated with a product would be a variable cost since the packaging costs would increase as sales increased. The raw materials used to make the product would also be variable costs since the cost of materials would rise and fall depending on sales volume of the product.

Detailed explanation-3: -Packaging cost Another example of a variable cost is the packaging because the amount of packaging required relates to the number of products being produced and packaged. Some companies use their packaging strategically, using less packaging when their sales or production volume is decreasing.

Detailed explanation-4: -Variable costs change based on the amount of output produced. Variable costs may include labor, commissions, and raw materials. Fixed costs remain the same regardless of production output. Fixed costs may include lease and rental payments, insurance, and interest payments.

Detailed explanation-5: -Examples of fixed costs include rent, salaries, insurance, property taxes, interest expenses, depreciation, and potentially some utilities.