A cost of production that is positively related to output is the

Step 1: Analyze the question The question asks which cost rises when output rises. That is a positive relationship: more output means more cost.

Step 2: Explain the concepts

• Total fixed cost (TFC): This stays the same at every level of output, even at zero output. Examples are rent and insurance. It is not related to output.
• Average fixed cost (AFC): This is TFC ÷ output. As output rises, AFC falls, so the relationship is negative (inverse).
• Variable cost (VC): This changes directly with output. Examples are raw materials and wages of casual workers. More output needs more inputs, so VC rises. The relationship is positive.
• Social cost: This is the total cost to society, including external costs such as pollution. It is not the standard cost-output relationship the question is testing.

Step 3: Work through the options

• A. TFC is constant, so it is not related to output. ✗
• B. AFC falls as output rises, so it is negatively related. ✗
• C. Variable cost increases as output increases, so it is positively related. ✓
• D. Social cost is not defined by a direct output relationship. ✗

Step 4: Answer The correct option is C. variable cost.

Exam tip: Remember "Fixed = Flat, Variable = Vary with output." Total fixed cost is a flat horizontal line, while variable cost slopes upward. Average fixed cost always slopes downward, because the same fixed cost is spread over more units.