Because Variable Costs Are Assumed to Change in Direct Proportion

question 10

True/False

Because variable costs are assumed to change in direct proportion to changes in the activity level, the graph of the variable costs when plotted against the activity level appears as a circle.

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Definitions:

Opportunity Cost

Missing the chance to profit from several alternative options by deciding on one.

Hourly Wage Rate

The amount of money paid for each hour of work, commonly used to compensate employees in many occupations.

Marginal Utility

The augmented enjoyment or usefulness that comes from the consumption of an additional unit of a product or service.

Optimal Labor Supply

The amount of labor hours that maximizes an individual's or firm's net benefits or utility.