Stan Owns a Software Design Business

question 123

Multiple Choice

Stan owns a software design business.He obtained a bank loan to buy computer equipment for his business.He pays $1,000 per month for interest on the loan.He has 10 employees, each of whom is paid $4,000 per month.Because his business has been successful, next month he will increase employee wages to $5,000.If the revenue from his business remains at its current level, Stan is considering an addition to his office.Which of the following statements regarding Stan's business is false?

• A)The payments Stan makes to his employees are variable costs and explicit costs.
• B)The monthly payment Stan makes for his bank loan is an implicit cost.
• C)The monthly payment Stan makes for his bank loan is a fixed cost.
• D)The time and effort Stan spends on his software design business is an implicit cost.

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Definitions:

Variable

An element, feature, or factor that is liable to vary or change.

Characteristic

A feature or quality belonging typically to a person, place, or thing and serving to identify it.

Categorical Variables

Variables that represent types or categories that can be named or labeled without implying any numerical order.

Cases

Instances or occurrences of a particular condition or category being studied in research or documented in various fields such as law or medicine.