Which of the following is true if the constant in the cost function is low compared to the last year?
A) total variable costs have decreased
B) production has increased
C) the sales commission percentage has decreased
D) total fixed cost have decreased

Question

Quizplus · Accepted Answer

If the constant in the cost function is low compared to the last year, it means that the total fixed costs have decreased. The constant represents the fixed costs in the cost function, so a decrease in the constant indicates a decrease in fixed costs. This does not necessarily mean that variable costs or production have changed, or that the sales commission percentage has decreased.

Which of the Following Is True If the Constant in the Cost