A curvilinear relationship between variable costs and changes in activity levels suggests what?
A)A strictly linear relationship between fixed costs and activity levels is implausible.
B)A strictly curvilinear relationship between changes in activity levels and variable costs is possible only within the relevant range.
C)Since the relationship between activity levels and variable costs is linear within the relevant range and less linear at lower and higher levels outside the relevant range, the straight-line (linear) relationship takes on a curvature in the real world.
D)None of the above.

Question

Quizplus · Accepted Answer

Within the relevant range, the relationship between activity levels and variable costs is generally linear. However, at lower and higher levels outside the relevant range, this relationship becomes less linear and takes on a curvature. This suggests that a curvilinear relationship between variable costs and changes in activity levels is not uncommon in the real world. It does not necessarily imply anything about fixed costs.

A Curvilinear Relationship Between Variable Costs and Changes in Activity