Variable costs are A. a production expense that changes with the quantity of output produced. B. a production expense that does not vary with output. C. equal to total cost divided by the units of output produced. D. the amount by which a firm's cost changes if the firm produces one more unit of output.

The answer is: A) a production expense that changes with the quantity of output produced.

Explanation:

Variable costs are costs that vary in proportion to production output. Variable costs increase if the production output increases, and decreases if the production output decreases.

For example, packaging costs depend on the amount of final goods produced. If the amount of goods increases, then more packaging will be needed (increasing the variable costs).