When the output is less than the optimal rate of output, the average unit cost will be:
A)lower.
B)the same.
C)higher.
D)could be either higher or lower.
E)could be either higher, lower or the same.

Question

Quizplus · Accepted Answer

When the output is less than the optimal rate, the average unit cost will be higher because the fixed costs are spread over fewer units, and the operation may not be achieving economies of scale.

When the Output Is Less Than the Optimal Rate of Output