As the volume of output decreases:
A) Fixed costs per unit will increase.
B) Fixed costs per unit will decrease.
C) Fixed costs per unit will not change.
D) Fixed costs in total will decrease.

Question

Quizplus · Accepted Answer

Fixed costs are constant regardless of the level of output, so as the volume of output decreases, fixed costs must be spread across fewer units, leading to an increase in fixed costs per unit.

As the Volume of Output Decreases