Railroad Per Unit Costs Decline as Traffic Increases

question 28

Multiple Choice

Railroad per unit costs decline as traffic increases.What is the reason for this cost behavior?

• A) A high proportion of variable costs in the cost structure
• B) A low proportion of fixed costs in the cost structure
• C) A large proportion of fixed costs in the cost structure
• D) Limited capital investment by the railroads

---

Definitions:

Inputs Variable

Factors of production such as labor, land, and capital that are used to create goods and services.

Long-Run Adjustment

A process businesses undergo to alter their level of output in response to economic changes, ensuring long-term economic efficiency and resource allocation.

Assembly-Line

A manufacturing process in which parts are added to a product in a sequential manner to create a finished product more efficiently.

Redesigned Facility

A facility or plant that has been modified or rebuilt to improve efficiency, functionality, or to meet new standards.