Railroad Per Unit Costs Decline as Traffic Increases

question 40

Multiple Choice

Railroad per unit costs decline as traffic increases. What is the reason for this cost behavior?

• A) A high proportion of variable costs in the cost structure
• B) A low proportion of fixed costs in the cost structure
• C) A large proportion of fixed costs in the cost structure
• D) Limited capital investment by the railroads

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Definitions:

Revenues

The total income generated from normal business operations and before any expenses are subtracted.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities. It represents ownership interest.

Statement

A document that presents an account of particular facts or events in detail.

Liability

Any type of financial debt or obligation that a company or individual owes, which must be settled in the future through the transfer of assets, provision of services, or other forms of payment.