If Output in an Economy Is 20, and the Investment

question 63

Multiple Choice

If output in an economy is 20, and the investment function is 0.25Y,

• A) 16 units of output are being consumed.
• B) 25 units of output are being invested.
• C) 15 units of output are being consumed.
• D) 20 units of output are being invested.

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Definitions:

Fixed Cost

Expenses that do not change with the level of production or sales, such as rent or salaries.

Variable Cost

Expenses that change in proportion to the production level or the amount of output.

Period Cost

Period cost refers to any cost that is not directly tied to the production of goods and is expensed in the accounting period in which it is incurred, such as selling, general, and administrative expenses.

Product Cost

The total cost incurred to create a product, including direct labor, direct materials, and manufacturing overhead.