The greater the variability of costs, the greater the business risk of the firm. This is determined by the ____.
A) selling price
B) cost of inputs used to produce a firm's output
C) sales volume
D) existence of market power

Question

Quizplus · Accepted Answer

The variability of costs is determined by the cost of inputs used to produce a firm's output. The higher the variability, the greater the business risk because it makes it harder to predict and control expenses. This can lead to unexpected losses or reduced profits.

The Greater the Variability of Costs, the Greater the Business