If Output Increases by 60% and Is Still Within the Relevant

question 123

Multiple Choice

If output increases by 60% and is still within the relevant range, what will be the most likely result?

• A) Total variable costs will increase by 60%.
• B) Per-unit fixed cost will remain unchanged.
• C) Total committed fixed costs will increase by 60%.
• D) Total discretionary fixed costs will decrease by 60%.

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Definitions:

Upside Price Movement

The potential increase in the price of an asset or security from its current level.

Bull Spread

An options strategy aiming to profit from a moderate increase in the price of the underlying asset.

Security Fall

A decrease in the price or value of a security, such as a stock or bond, often influenced by market conditions and investor behavior.

Long Call

A long call is an options trading strategy where the investor purchases a call option with the expectation that the underlying stock will increase in value before the option expires.