Question

On the unit cost graph, why are variable costs per unit horizontal and fixed while total...

On the unit cost graph, why are variable costs per unit horizontal and fixed while total costs per unit are downward sloping?

Homework Answers

Answer #1

Because a fixed cost per unit is decreasing.

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total cost per unit is the sum of variable cost per unit and fixed cost per unit.

Fixed cost is the same at all level of output, and fixed cost per unit decreases as output increases.

The variable cost per unit is horizontal and fixed means it is constant per unit.

total cost per unit =variable cost per unit + fixed cost per unit

variable cost per unit is fixed

fixed cost per unit is decreasing

it means the total cost per unit is also decreasing.

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