Your Boss Explains to You That the Total Fixed Costs

question 30

Essay

Your boss explains to you that the total fixed costs of the company are $1 million. He also informs you that each unit of production will cost twenty five cents more with each 100-unit increase. He has asked you to draw the fixed costs of the company with costs on the vertical axis and quantity of goods sold on the horizontal axis. Without drawing a graph tell your boss what the graph will look like using words. What information did your boss give you that you didn't need in order to draw the graph?

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Definitions:

Pure Rate

The real rate of interest that would exist in the market in the absence of inflation, default risk, and other factors that could affect nominal rates.

Pure Rate

The theoretical rate of return of an investment with no risk of financial loss, often considered as the base rate for determining risk-adjusted returns.

Inflation

The speed at which the average cost of goods and services increases, leading to a decrease in buying power.

Default Risk Premium

The extra fee a borrower is required to cover to reward the lender for taking on the default risk.