In Describing the Cost Equation, Y = a + BX

question 105

Multiple Choice

In describing the cost equation, Y = a + bX, "a" is:

• A)the dependent variable cost.
• B)the independent variable the level of activity.
• C)the total fixed cost.
• D)the variable cost per unit of activity.

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Definitions:

Firm

A business enterprise or establishment engaged in commercial, industrial, or professional activities.

Normal Good

A type of good for which demand increases when consumer income rises, and falls when consumer income decreases.

Demand Shift

A change in the quantity demanded at every price point, often caused by factors like consumer preferences, income, and price of related goods.

Quantity Demanded

The cumulative quantity of a product or service that buyers are ready and capable of buying at a specific price.