The relationship between total operating cost and quantity


The relationship between total operating cost and quantity produced (in a manufacturing company) is given by the linear regression model TC = 5,000 + 500Q, where TC = total operating cost (in $) per annum and Q = quantity produced per annum (kg).

What reservations might you have about relying on the above model for decision-making purposes?

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Finance Basics: The relationship between total operating cost and quantity
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