As operative miles increase:
A) Fixed cost and operating costs increase
B) Operating costs decrease and fixed cost decrease
C) Operating costs decrease and fixed cost increase
D) Operating cost increase and fixed cost decrease

Question

Quizplus · Accepted Answer

As operative miles increase, there is more wear and tear on the vehicle, which results in an increase in operating costs (such as fuel, maintenance, and repairs). However, fixed costs (such as insurance, registration fees, and depreciation) may decrease if the vehicle is being used more efficiently. Therefore, the best choice is D - operating costs increase and fixed cost decrease.

As Operative Miles Increase