The greater the variability of costs, the greater the business risk of the firm.This is reflected in 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 cost of inputs used to produce a firm's output is directly related to the variability of costs. If the costs vary widely, it becomes difficult for the firm to predict and manage its expenses. This can lead to higher costs and lower profits, which increases the business risk of the firm. Therefore, the variability of costs is reflected in the cost of inputs used to produce a firm's output.

The Greater the Variability of Costs, the Greater the Business