Which of the following terms refers to the costs that can change based on production output?

The term that refers to costs that can change based on production output is variable costs. These costs fluctuate with the level of production; as a company produces more goods, the variable costs will increase because they directly correlate with the output volume. For example, costs related to raw materials, labor specifically required for production, and utilities consumed during production are all considered variable costs.

This understanding is crucial in economics as businesses must manage variable costs carefully to ensure profitability, particularly when planning production and pricing strategies. In contrast, fixed costs remain unchanged regardless of the level of output, meaning they do not reflect the fluctuations in production levels. Marginal costs relate specifically to the cost of producing one additional unit and do not represent the overall costs influenced by broader changes in output. Common costs refer to shared costs among multiple products or services rather than specific variability with production output.