chaoskwan
16-10-11, 03:44 PM
Qns 56:Up to a given level of activity in each period , the purchase price per unit of a raw material is constant.After that point a lower price per unit applies to both further units purchased and also retrospectively to all units already purchased. Which graph depicts the total cost of the raw material for that period ?
Ans:
The answer given in the book is D with a price drop and both lines having the same gradient (as there is no change in the degree of variability).
However ,if i were to plot a simple graph of the above scenario, both lines on graph (after the price drop) would definitely have different gradients which would correspond to answer A.
Would anyone be able to explain why the answer is D and not A ? The explanation in the answer is not really clear to me.
Ans:
The answer given in the book is D with a price drop and both lines having the same gradient (as there is no change in the degree of variability).
However ,if i were to plot a simple graph of the above scenario, both lines on graph (after the price drop) would definitely have different gradients which would correspond to answer A.
Would anyone be able to explain why the answer is D and not A ? The explanation in the answer is not really clear to me.