Fixed cost per unit . . . . . . . . with increase in output.

The correct answer is B. decreases.

Fixed costs are costs that do not change with the level of output. For example, rent, insurance, and depreciation are all fixed costs. When output increases, fixed costs are spread over a larger number of units, so the fixed cost per unit decreases.

Option A is incorrect because fixed costs do not increase with output. Option C is incorrect because fixed costs do not remain constant with output. Option D is incorrect because fixed costs do not increase at a decreasing rate with output. Option E is incorrect because fixed costs do not increase proportionately with output.