As Production Moves Up, the Average Cost Per Unit Decreases

question 127

Multiple Choice

As production moves up, the average cost per unit decreases because ________.

• A) variable costs decrease
• B) of increasing diseconomies of scale
• C) fixed costs are spread over more units
• D) overhead costs decrease
• E) revenue increases

---

Definitions:

Diagram

A simplified drawing showing the appearance, structure, or workings of something in a conceptual or visual form.

Profits

The financial gain realized when the revenue earned from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Game Theory Matrix

A tabular representation used in game theory to display the payoffs for each player for every possible combination of strategies.

Economic Efficiency

A situation where all resources in an economy are optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.