As Production Increases, the Fixed Cost Per Unit

question 70

Multiple Choice

As production increases, the fixed cost per unit

• A) increases
• B) decreases
• C) remains the same
• D) either increases or decreases, depending on the variable costs

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Definitions:

Minimum Point

The point at which a function reaches its smallest value, often used in the context of costs or optimization problems.

Short Run

A period of time during which at least one input of production is fixed, affecting the firm's ability to adjust production levels.

Variable Cost

A cost that depends on the quantity of output produced; the cost of a variable input.

Average Total Cost

This is the sum of all the costs of production (fixed and variable) divided by the number of units produced, providing a comprehensive understanding of production expenses.