Fixed cost with increase in per unit output

The correct answer is: C. Fixed/remain constant.

Fixed costs are costs that do not change in the short run, regardless of the level of output. Examples of fixed costs include rent, insurance, and depreciation.

When the per unit output increases, the total fixed cost remains the same. This is because the fixed cost is spread out over a larger number of units, so the per unit cost decreases.

For example, if a company has a fixed cost of $100,000 and produces 10,000 units, the per unit cost is $10. If the company produces 20,000 units, the per unit cost is $5.

The other options are incorrect because:

• Option A is incorrect because fixed costs do not decrease with an increase in per unit output.
• Option B is incorrect because fixed costs do not increase with an increase in per unit output.
• Option D is incorrect because fixed costs are not variable costs. Variable costs are costs that change in the short run, depending on the level of output.