Costs of Production That Change with the Rate of Output

question 69

Multiple Choice

Costs of production that change with the rate of output are:

• A) Sunk costs.
• B) Fixed costs.
• C) Opportunity costs.
• D) Variable costs.

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Definitions:

Forward Exchange Rate

A contractually fixed exchange rate for the future exchange of currencies at a specified date, used to hedge against foreign exchange risk.

Arbitrage

The simultaneous purchase and sale of the same assets in different markets to exploit price differences for a profit.

Risk-free Rate

The expected yield from an investment that carries no risk of losing money, often identified by the returns on government bonds.

Futures Market

A financial exchange where people can trade standardized futures contracts; that is, a contract to buy specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future.