Are the costs of utilities always fixed, always variable, or can they be both? Briefly explain
What will be an ideal response?
For many firms, the cost of utilities can be a mixture of fixed and variable costs. For example, a store may keep its lights on and its outdoor signs lighted day and night. The cost of the electricity to keep these lights on would, therefore, be a fixed cost because the cost does not vary with the quantity of the product sold. On the other hand, if, for example, the store is a laundromat, then the more people who use the washers and dryers, the more electricity it uses. So, that part of its electric bill is a variable cost.
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Suppose that 1982 is the base year for the Consumer Price Index (CPI) and in 2014 the CPI was 190. What does this "190" mean?
A) What cost $100 in 1982 on average cost 190 times as much in 2014. B) What cost $100 in 1982 on average cost $190 in 2014. C) What cost $100 in 1982 on average cost 0.19 times as much in 2014 (that is, it cost $19 in 2014). D) What cost $100 in 1982 on average cost $19 more in 2014.