Option 1: Total Variable Cost and Total Cost increase. -> When a firm increases output, it must use more variable inputs (labor, raw materials, etc.). This causes Total Variable Cost (TVC) to rise. Since Total Cost (TC) = Total Fixed Cost (TFC) + Total Variable Cost (TVC), and fixed costs remain constant while variable costs increase, the Total Cost must also increase. This represents the fundamental relationship between production levels and costs in the short run. -> correct
The firm must employ more of the variable inputs, in order to increase the production of output. Therefore, as output increases
CUET UG 2025 — Economics Micro
2025mcqeasy
The firm must employ more of the variable inputs, in order to increase the production of output. Therefore, as output increases
Official previous-year question
Held on 28 May 2025 · Verified 13 Jul 2026.
Options
- A
Total Variable Cost and Total Cost increase.
- B
Total Variable Cost and Total Cost decrease.
- C
Total Variable Cost decrease and Total Cost increase.
- D
Total Variable Cost increase and Total Cost decrease.
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