Question

Two types of costs that each combine fixed cost and variable cost behaviors are: a. capacity and incremental costs. b. semi-fixed and semi-variable costs. c. composite and average costs. d. step and mixed costs.

Answer 1

Answer: Option B

Explanation: Semi variable cost or semi fixed cost are the expenses which are composed of both fixed and variable cost. In such type of costs, the nature of the cost remains fixed till a certain level of production or consumption and becomes variable when the production level exceeds that stage.

For example :- A state charge its residents a fixed amount of electricity bill till 300 units of consumption and after 300 units the residents must pay $1 for every additional unit consumed.