Which of the following is characteristic of step costs?
A) remain the same within the relevant range
B) increase in direct proportion to increases in output
C) decrease in direct proportion to increases in output
D) have an increased fixed component at specified intervals

Question

Quizplus · Accepted Answer

Step costs are costs that increase in a step-like manner as output increases, but remain constant within each step. The fixed component of these costs increases at specified output intervals, which is characteristic of step costs. Therefore, option D is the correct answer. Option A is incorrect because step costs do not remain the same within the relevant range. Option B is incorrect because step costs do not increase in direct proportion to increases in output. Option C is incorrect because step costs do not decrease in direct proportion to increases in output.

Which of the Following Is Characteristic of Step Costs