Final answer:
The statement is false because fixed costs remain unchanged regardless of production levels, meaning they are constant in total dollar amount but not on a per unit basis when production varies.
Step-by-step explanation:
The statement that a fixed cost is constant on a per unit basis, but the total dollar amount changes as the number of units increases or decreases is false. Fixed costs are those expenses that do not change regardless of the level of production or the number of units produced.
They are the costs related to fixed inputs such as capital, rent on a factory, or research and development costs. These costs remain the same regardless if the production level is high or low.
For instance, with zero production, the fixed costs of $160 are still incurred, and as production levels increase, variable costs are added to these fixed costs, resulting in the total cost combining both fixed and variable expenses. The rent on a factory, one form of fixed cost, remains constant regardless of the production level, showcasing the nature of fixed costs.