In describing the cost formula equation Y = a + bX, which of the following statements i? correct:
A)"X" is the dependent variable.
B)as "X" increases "Y" decreases.
C)"a" is the fixed component.
D)"b" is the fixed component.

Question

Quizplus · Accepted Answer

In the cost formula equation Y = a + bX, "X" is the independent variable, not the dependent variable. As "X" increases, "Y" typically increases as well, so statement B is incorrect. "a" is the fixed component, representing the fixed costs that do not vary with changes in X. "b" is the variable component, representing the cost per unit of X, which can vary depending on the specific relationship between X and Y. Therefore, statement D is incorrect.

In Describing the Cost Formula Equation Y = a