Which of the Following Is True of Unit Fixed Costs

question 107

Multiple Choice

Which of the following is true of unit fixed costs?

• A) They decrease in value with an increase in output units.
• B) They are used to calculate the contribution margin.
• C) They lead to more effective business decisions when compared to total fixed costs.
• D) They act as a causal factor for sales that measures the output of an activity.

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Definitions:

Short Run

A period in economics during which at least one input, such as plant size, is fixed and cannot be changed.

Long Run

A period in economics where all factors of production and costs are variable, allowing for complete industry adjustment.

Fixed Inputs

Resources or factors of production that cannot be increased or decreased in the short run, often including capital and land.

Cross Elasticity

A measure of how the quantity demanded of one good responds to a change in the price of another good, indicating the substitutability or complementarity between the two goods.