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In Economics, Choices Must Be Made Because We Live in a World

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In economics, choices must be made because we live in a world of


Definitions:

Relevant Range

The range of activity or volume over which the assumed cost behavior is valid, beyond which cost patterns and relationships may change.

Average Costs

The total costs divided by the number of units produced, giving a per unit cost average.

Total Variable Cost

The sum of all costs that vary with output level, including materials, labor, and other costs that increase with production volume.

Relevant Range

The range of activity within which the assumptions about fixed and variable cost behavior are valid.

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