If a firm decreases production,then its:
A) variable costs decrease.
B) fixed costs decrease.
C) total costs stay the same.
D) None of these is true.

Question

Quizplus · Accepted Answer

When a firm decreases production, variable costs such as labor and materials also decrease since less of these inputs are needed to produce fewer units. Fixed costs, on the other hand, remain the same as they are expenses that do not vary with output levels. Therefore, the total costs decrease due to the decrease in variable costs.

If a Firm Decreases Production,then Its