Which of the following statements is TRUE about relevant range?
A)When costs reach a level above the relevant range, they are considered appropriate for analysis.
B)Linear estimates of an economist's curvilinear cost function is only valid within the relevant range.
C)When costs reach a level below the relevant range, they are considered appropriate for analysis.
D)The nonlinear relevant range is ignored, and only those costs outside of this range may be considered.

Question

Quizplus · Accepted Answer

The relevant range is the range where the company expects to operate and can make valid predictions based on historical data. Option B states that linear estimates of an economist's curvilinear cost function is only valid within the relevant range, which is true. This means that if costs fall outside of the relevant range, a different cost function will need to be used to make accurate predictions. Options A, C, and D are not true statements about the relevant range.

Which of the Following Statements Is TRUE About Relevant Range