The Following Data Pertains to Activity and Maintenance Cost for Two

question 4

Multiple Choice

The following data pertains to activity and maintenance cost for two recent periods:
Maintenance cost is a mixed cost with both fixed and variable components.Using the high-low method,the cost formula for maintenance cost is:

• A) Y = $4.25 X
• B) Y = $14,000 + $2.50 X
• C) Y = $2,500 + $4.25 X
• D) Y = $4.50 X

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Definitions:

Competitive Price

The market price at which goods are sold in a perfectly competitive market, where no single buyer or seller can influence the price.

Fixed-Coefficient Technology

A production process where input ratios are constant and cannot be substituted for one another in the production process.

Demand Function

A mathematical relationship that describes how the quantity demanded of a good or service varies with changes in its price, and possibly other factors.

Horizontal Labor Supply Curve

A graphical representation suggesting that a worker's willingness to work does not change regardless of wage increases over a certain range.