The 0-1 variables in the fixed cost models correspond to
A)a process for which a fixed cost occurs.
B)the number of products produced.
C)the number of units produced.
D)the actual value of the fixed cost.

Question

Quizplus · Accepted Answer

In fixed cost models, the 0-1 variables represent whether or not a particular process is selected, which incurs a fixed cost. Therefore, the correct choice is A. B and C are not correct as they refer to the quantity of products or units produced, which are not related to fixed costs. D is also not correct as the 0-1 variables do not represent the actual value of the fixed cost, but rather whether or not it is incurred.

The 0-1 Variables in the Fixed Cost Models Correspond to