The diagram represents the behavior of a cost item as the level of output changes.
Which ONE of the following situations is described by the graph?
A. Discounts are received on additional purchases of material when certain quantities are purchased.
B. Employees are paid a guaranteed weekly wage, together with bonuses for higher levels of production.
C. A license is purchased from the government which allows unlimited production.
D. Additional space is rented to cope with the need to increase production.
Answer: A
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