Which of the Following Statements Is Correct? If the Activity

question 2

Multiple Choice

Which of the following statements is correct? If the activity level goes outside the relevant range:

• A) fixed costs can no longer be assumed to be fixed.
• B) fixed costs will remain constant.
• C) fixed costs will always increase.
• D) fixed costs will always decrease.

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Definitions:

365-day Year

A method used for interest calculations where a year is assumed to have exactly 365 days.

No-fault Insurance

A type of auto insurance policy where insureds are indemnified for losses by their own insurance company, regardless of fault in the incident.

Medical Expenses

Medical expenses refer to the costs incurred for healthcare services, including doctor visits, hospital stays, medications, and procedures, which can be covered by insurance or out-of-pocket payments.

Low-risk Driver

A motorist considered less likely to file an insurance claim based on factors like driving history, thereby often enjoying lower insurance premiums.