Which of the following statements is true
A)Total variable cost change in direct proportion to changes in the amount of the activity.
B)In the short run, all cost are variable.
C)In the long run, all costs are fixed.
D)Mixed costs are step costs.

Question

Quizplus · Accepted Answer

Total variable cost changes in direct proportion to changes in the amount of the activity, which means that as the level of activity increases or decreases, the total variable cost will increase or decrease accordingly. This is because variable costs vary with the level of activity. Option B is incorrect because in the short run, some costs are fixed, such as rent and property taxes. Option C is incorrect because in the long run, all costs are variable. Option D is incorrect because mixed costs have both variable and fixed components and do not necessarily exhibit step costs.

Which of the Following Statements Is True