As a firm produces more units of a good, its
A)fixed costs remain constant in the short run and its variable costs rise.
B)variable costs decline in the short run and its fixed costs rise.
C)fixed and variable costs remain constant in the short run.
D)variable costs remain constant in the short run and its fixed costs fall.

Question

Quizplus · Accepted Answer

As production increases, the firm incurs additional variable costs such as labor and materials. However, fixed costs, such as rent and equipment, remain constant in the short run. Therefore, the total cost of production increases due to the increase in variable costs.

As a Firm Produces More Units of a Good, Its