Fixed Costs Stay the Same,on a Per-Unit Basis,as Activity Level

question 31

True/False

Fixed costs stay the same,on a per-unit basis,as activity level changes.

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Definitions:

Diseconomies of Scale

Occur when a company or business grows so large that the costs per unit increase, leading to decreased efficiency.

Economies of Scale

The cost advantage that arises with increased output of a product due to spreading fixed costs over more units of production.

Minimum Efficient Scale

The smallest level of production a firm can achieve while still taking full advantage of economies of scale regarding costs per unit.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, leading to a reduction in average costs with increased output.