If the Consumption Function Is Defined as C = 5,500

question 193

Multiple Choice

If the consumption function is defined as C = 5,500 + 0.9Y,what is the value of the multiplier?

• A)0.1
• B)0.9
• C)9
• D)10

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Definitions:

Variable Cost

Expenses that change in proportion to the activity of a business such as costs of goods sold, raw materials, and labor expenses.

Fixed Manufacturing Cost

Costs that remain constant regardless of the level of production, such as rent, salaries, and maintenance expenses.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, including depreciation, utilities, and salaries for supervisors.

Gross Margin

The difference between sales revenue and the cost of goods sold, indicating the profitability of a company's core activities excluding overhead.