A Limitation of the High-Low Method Is That

question 42

Multiple Choice

A limitation of the high-low method is that

• A)It is costly to use because it uses a statistical technique to estimate the cost components.
• B)It is complex to calculate.
• C)It can only be used if the levels of activity cover a wide range.
• D)Because it is based on only two extreme points,the high and low activity levels,the cost equation may not be truly representative of the cost relationship.

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Definitions:

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Open-Economy Macroeconomic Model

A framework used in economics to analyze and understand the behaviors and interactions of economies that engage in international trade and finance.

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