Which of the Following Is a Difference Between a Static

question 46

Multiple Choice

Which of the following is a difference between a static and a flexible budget?

• A) Static budgets use the same fixed cost amounts, whereas flexible budgets change the amount of fixed costs at different levels of activity.
• B) Static budgets are based on the same per-unit variable amount, whereas flexible budgets are based on multiple per-unit variable amounts.
• C) Static budgets are based on a single estimate of volume, whereas flexible budgets show estimated costs and revenues at a variety of activity levels.
• D) None of these answers are correct.

---

Definitions:

Price Controls

Government regulations establishing maximum or minimum prices to be charged for specified goods and services, often intended to manage inflation or protect consumers.

Centrally Planned Economy

A type of economic system where decisions about production, investment, prices, and incomes are determined centrally by a government.

Capitalist Economy

A system of economy where the ownership of capital resources is in the hands of private individuals or companies, decisions regarding investments are privately made, and the determination of prices, output, and distribution of products is largely governed by the dynamics of competition in a free-market environment.

Price Mechanism

is the process by which the forces of supply and demand determine the price of goods and services in a market economy.