Which statement best describes how fixed and variable costs behave per unit and in total?
A)Both costs are constant when considered on a per-unit basis.
B)Both costs are constant when considered on a total basis.
C)Fixed costs are constant in total and variable costs are constant per unit.
D)Variable costs are constant in total and fixed costs are constant per unit.

Question

Quizplus · Accepted Answer

Fixed costs remain constant in total as output increases, while variable costs remain constant per unit of output. This means that as output increases, fixed costs are spread over a larger number of units, resulting in a lower fixed cost per unit. Variable costs, on the other hand, increase proportionally with the level of output, resulting in a constant per-unit cost.

Which Statement Best Describes How Fixed and Variable Costs Behave