Which of the following is true about the changes in fixed cost?
A) An increase in production will result in an increase in per unit fixed cost.
B) A decrease in fixed cost will result in an increase in variable cost.
C) An increase in production will result in a decrease in per unit fixed cost.
D) A decrease in production will result in an increase in total fixed cost.

Question

Quizplus · Accepted Answer

As production increases, fixed costs are spread over a larger number of units, resulting in a decrease in per unit fixed cost. Therefore, option C is the correct choice. Option A is incorrect because an increase in production will lead to a decrease in per unit fixed cost, not an increase. Option B is incorrect because a decrease in fixed cost will have no impact on variable cost. Option D is incorrect because a decrease in production will not necessarily result in an increase in total fixed cost.

Which of the Following Is True About the Changes in Fixed