As the Volume of Output Decreases

question 78

Multiple Choice

As the volume of output decreases:

• A) Fixed costs per unit will increase.
• B) Fixed costs per unit will decrease.
• C) Fixed costs per unit will not change.
• D) Fixed costs in total will decrease.

---

Definitions:

Portfolio

An assortment of investments including stocks, bonds, commodities, cash and equivalents, along with closed-end funds and ETFs (exchange traded funds).

Market Risk Premium

The additional return an investor expects from holding a risky market portfolio instead of risk-free assets.

Expected Inflation

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling, as anticipated by consumers, businesses, and investors.

Required Return

The minimum rate of return on an investment that investors expect to compensate them for the level of risk.