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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