How Do Variable Costs Per Unit Behave

question 206

Multiple Choice

How do variable costs per unit behave?

• A)They decrease as production increases.
• B)They increase as production decreases.
• C)They decrease as production decreases.
• D)They remain the same throughout production levels within the relevant range.

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Definitions:

Production Possibilities

Different combinations of goods and services that an economy can produce using all of its resources efficiently.

Opportunity Costs

The cost of forgoing the next best alternative when making a decision, representing the potential benefits an individual, investor, or business misses out on when choosing one alternative over another.

Increasing Costs

This refers to a situation where the costs of production increase as the output level increases, often seen in industries with limited resources.

Production Efficiencies

Occurs when a firm or economy can no longer produce additional amounts of a good without lowering the production level of another product.