If the Consumption Function Is Defined as C = 7,250

question 51

Multiple Choice

If the consumption function is defined as C = 7,250 + 0.8Y,what is the autonomous level of consumption expenditure?

• A)$5,800
• B)$7,250
• C)$9,062.50
• D)$9,700

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Definitions:

Period Cost

Expenses incurred during a specific time period that are not directly tied to production activities.

Fixed Costs

Expenses that do not change with production volume, remaining constant regardless of business activity level.

Relevant Range

The span of activity or volume in which the assumptions about fixed and variable cost behavior remain valid.

Variable Cost

A cost that changes in direct proportion to changes in the level of production or sales volume.