Question

Fixed costs expressed on a per unit basis:

A) increase with increases in activity.
B) decrease with increases in activity.
C) are not affected by activity.
D) should be ignored in making decisions since they cannot change.

Answer 1

Fixed costs, in the context of economics, do not change with increases in activity.

Step-by-step explanation:

Fixed costs, in the context of economics, are the costs that do not change regardless of the level of production. They are the expenses that a firm must incur before producing any output, such as rent on a factory or a retail space. Fixed costs are expressed on a per unit basis and do not change with increases in activity. Therefore, option C) are not affected by activity is the correct answer.