A Cost Structure Which Relies More Heavily on Fixed Costs

question 28

Multiple Choice

A cost structure which relies more heavily on fixed costs makes the company

• A) more sensitive to changes in sales revenue.
• B) less sensitive to changes in sales revenue.
• C) either more or less sensitive to changes in sales revenue, depending on other factors.
• D) have a lower break-even point.

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Definitions:

Specific Weights

A measure term used in various contexts to assign importance to certain components or variables within a calculation or assessment process.

Time Inconsistency

A situation in which a decision-maker's preferences change over time in such a way that what is initially considered preferable is no longer so at a later date.

Monetary Policy

Economic policy laid out by the central bank, involving management of money supply and interest rates to control inflation and ensure economic stability.

Reducing Inflation

Methods and policies implemented by governments or central banks to slow down the rate at which prices for goods and services increase.