Question

Fixed cost per unit ________ with increase in output.

• A. Decreases
• B. Increases
• C. changes
• D. Sometimes

Answer 1

The correct option is A Decreases

A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold. Fixed costs are expenses that have to be paid by a company, independent of any specific business activities.

However, the fixed cost per unit decreases as production increases, because the same fixed costs are spread over more units.