In describing the cost formula equation Y = a + bX,which of the following statements is correct:
A) "X" is the dependent variable.
B) "a" is the fixed component.
C) "b" is the fixed component.
D) as "X" increases "Y" decreases.

Question

Quizplus · Accepted Answer

In the cost formula equation Y = a + bX, "Y" is the dependent variable (as it depends on the value of "X"), "a" is the fixed component (representing the cost at zero units of "X"), and "b" is the variable component or the slope of the equation (representing the increase in cost per unit of "X"). Therefore, option B is correct. Option D is also incorrect, as there is no direct relationship between the increase or decrease in "X" and "Y" without knowing the value of "b".

In Describing the Cost Formula Equation Y = a