What Is a Plausible Explanation of a Cost Function Has

question 7

Multiple Choice

What is a plausible explanation of a cost function has a slope coefficient of $30 for purchases of 1 to 1,000 units and $25 for production of 1,100 - 2,000 units, and $20 for production of 2,001 - 3,000 units

• A) the fixed cost per unit has decreased because of efficiencies
• B) economies of scale allowing for lower cost purchases with larger orders
• C) their is a linear cost function in effect
• D) contribution margins are decreasing

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Definitions:

Bargaining Process

The negotiation or discussion between two or more parties to come to a mutually acceptable agreement or contract.

Internet

A global network of computers and servers enabling information exchange and communication.

Invitation To Treat

An expression indicating willingness to negotiate, which does not necessarily constitute an offer but invites others to make an offer.

Self-Service

A business model or system where customers perform tasks typically done by staff members, such as checkout or order placement, on their own.