Which Expense Varies Directly with Production

question 43

Multiple Choice

Which expense varies directly with production?

• A) Managers salary
• B) Direct materials
• C) Depreciation of equipment
• D) Insurance

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Definitions:

Horizontal Demand

A market situation where the demand curve is perfectly elastic, indicating that consumers are willing to purchase any quantity at a particular price.

Marginal Revenue

The additional income from selling one more unit of a good; sometimes equal to the price of the good.

Marginal Cost

The increase or decrease in the total cost that arises from producing one additional unit of a product or service.

Profit

Earnings resulting from conducting business, after subtracting all operational costs, taxes, and expenses from total revenue.