If Two Variables Are Correlated with One Another, It Is

question 308

True/False

If two variables are correlated with one another, it is possible but not necessary that one variable causes the other.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, examples include rent, salaries, and insurance premiums.

Variable Cost

Expenses that change in proportion to the activity or volume of business, such as materials, labor, and transaction fees.

Depreciation Expense

An accounting method of allocating the cost of a tangible asset over its useful life to represent wear and tear over time.

Variable Costs

Expenses that directly fluctuate according to the volume of production or sales.