Question

Provide examples of decisions that require knowledge of how costs and revenues vary with different levels of activity.

Answer 1

Decisions that require knowledge of how costs and revenues vary with different levels of activity include: deciding the quantity of goods or services to produce and sell, setting the price of a product or service, and choosing the optimal level of advertising or marketing expenditure.

Step-by-step explanation:

Decisions that require knowledge of how costs and revenues vary with different levels of activity include:

1. Deciding the quantity of goods or services to produce and sell, based on the estimated costs and expected revenues
2. Setting the price of a product or service, considering the cost of production and potential customer demand
3. Choosing the optimal level of advertising or marketing expenditure, taking into account the expected increase in revenue and associated costs

These decisions require an understanding of how costs and revenues change as the level of activity, such as production or sales volume, changes.