As the volume of production in a firm increases, the average cost per unit decreases until some optimal volume of production is reached, after which the average costs of production begin to rise because of A) diseconomies of scale. B) economies of scope. C) diseconomies of scope. D) economies of scale.

diseconomies of scale. More test answers on https://studyhippo.com/chapter-4-strat-test-53406/

As the volume of production in a firm increases, the average cost per unit decreases until some optimal volume of production is reached, after which the average costs per unit of production begin to rise because of diseconomies of scale.

True More test answers on https://studyhippo.com/strat-5700-chapter-4-53415/

The basic notion of economies of scale is that as a plant gets larger and volume increases, the average cost per unit of output drops.

T More test answers on https://studyhippo.com/opma-3306-ch-4-t-f/

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Average Cost Per Unit Flashcards, test questions and answers

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What is Average Cost Per Unit?

The Average Cost Per Unit is a measure of the total cost of producing one unit of a product or service. It is calculated by dividing the total cost of production by the number of units produced. The average cost per unit can be used to determine the profitability of a company, as well as to compare different product lines and track changes in production costs over time.Average cost per unit is often used in pricing decisions, as it helps companies understand how much they will need to charge for their products or services in order to make a profit. This metric also helps businesses determine what their optimal production levels should be, so that they can maximize their profits while minimizing waste and other costs associated with producing too many or too few units. Additionally, this figure can help managers identify areas where costs need to be reduced in order to remain competitive in the marketplace. Average cost per unit can also provide insights into which materials are most cost-effective for use in the production process and which methods offer better economies of scale. By analyzing this figure over time, managers can identify trends that may indicate opportunities for improvement and growth within their operations. In addition, this metric may be used alongside other financial measures such as gross margin and operating income when making strategic decisions about pricing structures or investments in new technology or equipment upgrades. Overall, average cost per unit is an important tool for companies looking to maximize profits while maintaining competitive prices on their products and services. Careful analysis and monitoring of this measure over time can help businesses improve efficiency, control costs, and remain competitive within their respective industries.