A student group is taking a trip. The group expects between 100 and 200 students. The group could hire its own buses, or give students tickets to use existing bus companies. Each bus it hires holds 40 students. If it gives students tickets to existing bus companies, it can buy exactly the number of tickets needed. In this example, the cost of giving tickets to students to existing bus companies is an example of a
A) Variable cost
B) Fixed cost
C) Step cost
D) Mixed cost

Question

Quizplus · Accepted Answer

Variable costs change with the level of output or activity, and in this case, the cost of tickets would directly vary with the number of students attending the trip.

A Student Group Is Taking a Trip