Which one of following is not a reason to take into account the relevant range when estimating a cost?
A) The cost function is nearly linear within a relevant range
B) It is reasonable to assume that fixed costs remain fixed in this range
C) It is reasonable to assume that variable costs remain constant in this range
D) We cannot make assumptions about linearity within a relevant range

Question

Quizplus · Accepted Answer

Option D is incorrect because we can make assumptions about linearity within the relevant range. The relevant range is the range of activity over which the assumptions about behavior of cost are valid. These assumptions include that the cost function is nearly linear within the relevant range, fixed costs remain fixed in this range, and variable costs remain constant in this range. Therefore, the correct answer is D.

Which One of Following Is Not a Reason to Take