Assuming Costs Are Represented on the Vertical Axis and Volume

question 97

Multiple Choice

Assuming costs are represented on the vertical axis and volume of activity on the horizontal axis, which of the following costs would be represented by a line that starts at the origin and reaches a maximum value beyond which the line is parallel to the horizontal axis?

• A)total direct material costs
• B)a consultant paid $100 per hour with a maximum fee of $2,000
• C)employees who are paid $15 per hour and guaranteed a minimum weekly wage of $300
• D)rent on exhibit space at a convention

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Definitions:

Marginal Utility

The additional satisfaction or utility gained by consuming an additional unit of a good or service.

Total Utility

The total satisfaction or benefit a person receives from consuming a certain quantity of goods or services.

Marginal Utility

The extra pleasure or benefit gained by a person from consuming one more unit of a product or service.

Total Utility

The total satisfaction or benefit derived by a consumer from consuming a particular quantity of goods or services.