When total input costs rise slower than the total units of output produced, then the per-unit production costs
A) will decrease.
B) will increase.
C) will be unaffected.
D) may either increase or decrease.

Question

Quizplus · Accepted Answer

If total input costs rise slower than the total units of output produced, it means that the cost per unit of output is decreasing. This is because the fixed costs are being spread over a larger number of units, reducing the per-unit cost. As a result, per-unit production costs will decrease.

When Total Input Costs Rise Slower Than the Total Units