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

Question

Quizplus · Accepted Answer

Costs are valid for analysis when they fall within the relevant range, which is the range of activity levels where the assumptions of the cost function hold true. Linear estimates of a curvilinear cost function may be used to estimate costs within the relevant range. Option A and C are incorrect as costs within the relevant range are considered appropriate for analysis. Option D is incorrect as costs within the relevant range can also be considered for analysis.

When Are Costs Valid for Analysis