The correct answer is: A. discrete amounts.
A step cost function is a type of cost function in which the cost increases in discrete amounts, or steps. This is in contrast to a linear cost function, in which the cost increases in a linear fashion.
For example, a step cost function might be used to model the cost of manufacturing a product. The cost of manufacturing the first unit might be \$100, the cost of manufacturing the second unit might be \$150, and so on.
Step cost functions are often used in business to model costs that are incurred in discrete amounts, such as the cost of hiring a new employee or the cost of purchasing a new piece of equipment.
Here is a brief explanation of each option:
- Option A: Discrete amounts. This is the correct answer. In a step cost function, the cost increases in discrete amounts, or steps.
- Option B: Same amounts. This is not the correct answer. In a step cost function, the cost does not increase in the same amounts. It increases in discrete amounts.
- Option C: Linear amounts. This is not the correct answer. In a step cost function, the cost does not increase in linear amounts. It increases in discrete amounts.
- Option D: Nonlinear amounts. This is not the correct answer. In a step cost function, the cost does not increase in nonlinear amounts. It increases in discrete amounts.