If Activity Level Decreases,what Happens to the Total Variable Cost

question 152

Multiple Choice

If activity level decreases,what happens to the total variable cost?

• A)It decreases.
• B)It increases.
• C)It remains the same.
• D)It depends on how much the activity level increases.

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Definitions:

Moral Hazard

A situation in economics where one party is willing to take risks because the negative consequences of those risks will be borne by another party.

Fire Insurance

A type of property insurance that covers damage and losses caused by fire.

Precautions

Actions taken in advance to prevent harm or secure good outcomes.

Moral Hazard

The situation where the behavior of one party changes to the detriment of another after a transaction has occurred.