Which of the following is a cost that represents a variable cost for a clothing factory whose labor needs to fluctuate as production is increased and decreased each week?

Question

Oligopoly

Electric bill

Rent on factory

Fabric costs

Answer 1

In a clothing factory, the cost that represents a variable cost among the options provided is fabric costs.

Variable costs change in direct proportion to the level of production, meaning that as production increases, the costs for materials like fabric will also increase.

The other options represent different types of costs:

• Oligopoly is a market structure, not a cost.
• Electric bill can be a variable cost in some contexts, but it often has a fixed component and may not fluctuate directly with production levels as much as fabric costs would.
• Rent on factory is generally a fixed cost, as it does not change with the level of production.

Therefore, fabric costs is the correct answer.