Unit costs are always constant if:

Question

Quizplus · Accepted Answer

Unit costs are computed by dividing the total cost of production by the quantity produced. The total cost function is linear if there are fixed inputs, like rent or utilities, and variable inputs that rise proportionately with output. In this case, the total cost function is C(q) = F + vq, where F is fixed cost, v is variable cost per unit, and q is the quantity produced. Unit cost (C(q)/q) equals F/q + v. Therefore, unit cost is constant if F/q is constant and v is constant, which means input prices must be constant and the total cost function must be linear.

Unit Costs Are Always Constant If