As output increases, fixed cost per unit:Group of answer choicesremains constant.increases.equals to fixed costs.decreases.
Question
As output increases, fixed cost per unit:Group of answer choicesremains constant.increases.equals to fixed costs.decreases.
Solution
The answer is "decreases".
Here's why:
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Fixed costs are costs that do not change with the level of output or production. They are incurred regardless of whether the company produces any units or not.
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When we talk about fixed cost per unit, we are dividing the total fixed cost by the number of units produced.
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As the number of units produced (output) increases, the fixed cost per unit decreases because the same total fixed cost is being spread over more units.
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Conversely, if the number of units produced decreases, the fixed cost per unit increases because the same total fixed cost is being spread over fewer units.
Therefore, as output increases, fixed cost per unit decreases.
Similar Questions
28.Average fixed cost: A. Increases as output increases B. Remains the same whatever the level of output C. Diminishes as output increases D. Diminishes as output diminishes
If a company increases production without any increase in fixed costs:Group of answer choicesUnit total cost will increase.Fixed cost per unit will increase.Variable costs per unit will decrease.Gross margin per unit will increase when the units are sold.
Which of the following terms describes a cost that changes with the level of output?Fixed CostVariable CostSunk CostOpportunity Cost
The change in total output divided by the change in input is known asGroup of answer choicesmarginal cost.specialization.marginal product.marginal profit.total product.
Which of the following best describes a fixed cost? A cost which:Represents a fixed proportion of total costsRemains at the same level up to a particular level of outputHas a direct relationship with output.Remains at the same level when output increases.
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