Mitcham Ltd Has Observed That at an Activity Level of 10

question 7

Multiple Choice

Mitcham Ltd has observed that at an activity level of 10 000 units the maintenance cost is $13 000, and at 20 000 units the maintenance cost is $18 000. Using the high-low method, the cost formula for maintenance is:

• A) $6000 + $.60 x units.
• B) $6000 + $.1.54 x units.
• C) $5000 + $.60 x units.
• D) $1.54/unit.

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Definitions:

Resource Endowments

The natural resources, labor force, capital, and technology that a country possesses, which influence its economic potential.

Trade Gains

The benefits that countries receive from engaging in international trade, often leading to more efficient production and a greater variety of goods and services.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing an action.

Tons of Rice

A unit of measure indicating the quantity of rice, often used in trading and economic analysis related to agricultural commodities.