When the level of production is relatively low, the average cost per unit of output would ________ if output increased.
A) increase
B) decrease
C) either increase or decrease depending on marginal cost
D) remain constant

Question

Quizplus · Accepted Answer

When the level of production is relatively low, there are likely to be economies of scale, which means that the average cost per unit of output will decrease as output increases. This is because fixed costs are spread over a larger number of units, leading to a lower cost per unit.

When the Level of Production Is Relatively Low, the Average