Fixed Costs Expressed on a Per Unit Basis

question 304

Multiple Choice

Fixed costs expressed on a per unit basis:

• A) increase with increases in activity.
• B) decrease with increases in activity.
• C) are not affected by activity.
• D) should be ignored in making decisions since they cannot change.

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Definitions:

Short Run

A period in which at least one input (like plant and equipment) is fixed and cannot be changed by a business.

Long Run

A period of time in which all factors of production and costs are variable, allowing all inputs to be adjusted.

Alternative Goods

Products or services that can be used in place of each other, satisfying the same customer need or want.