Examination the nonlinear relationship between demand changes and cost behavior: a case study from Iraq

The paper tried to examine the effect of demand change on cost behavior and determine the type of relationship based on economic theory for asymmetry phenomenon, which implies that costs are more likely to increase when demand increases are greater than demand decreases. Study methodology tests the hypotheses of nonlinear relationships among the variables used in the proposed model. The proposed model has been tested by using multiple regression analyses depended on data have collected from Iraqi factories of cement manufacturing in ten years. The results showed that cost associated with demand changes on nonlinear relationships asymmetrically which degree of cost asymmetry drives via demand, costs arise relative to demand is higher than costs fall. The value of research is the first to present and examine the economic model of asymmetric cost behavior by demand changes in Iraq. A little literature has tested the effects of demand fluctuation on cost behavior, which is changed the organizational understanding from considerations of accounting to economics within a competitive environment.