1.

A step fixed-cost function:

a. is fixed over the short run but not over the long run
b. is often approximated with a continuous variable-cost function
c. remains the same over a narrow range of activity
d. example includes setup costs
Answer: a Difficulty: 2 Objective: 6
Terms to Learn: step cost function

2. A step variable-cost function:

a. is fixed over the long run but not over the short run
b. is often approximated with a continuous variable-cost function
c. remains the same over a wide range of activity
d. example includes adding additional warehouse space
Answer: b Difficulty: 2 Objective: 6
Terms to Learn: step cost function