Which of the Following Is Not an Assumption in CVP

question 136

Multiple Choice

Which of the following is not an assumption in CVP analysis?

• A) Actual costs will be exactly the amount that we predict in the analysis
• B) Operations are within the relevant range
• C) The revenue function is linear
• D) The cost function is linear

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Definitions:

Actual Price Level

The current general price of goods and services in the economy, not adjusted for inflation.

Short-Run Aggregate Supply

The overall quantity of products and services that companies intend to offer for sale within a brief period, based on existing prices.

Aggregate Demand

Overall market demand for goods and services in an economy, determined at a prevailing comprehensive price level for a certain duration.

Equilibrium Output

The level of output where the quantity of goods produced equals the quantity of goods consumed, resulting in market equilibrium.