EXERCISE 2-13 (15 MINUTES)

4. As the volume of steel produced increases, total fixed costs remain the

same; the fixed cost per unit decreases; total variable costs increase;

the variable cost per unit remains the same; total cost increases (due to

the increase in total variable cost); and the average unit cost decreases

(because of the decline in the fixed cost per unit).

Group Exercise 2-33 (continued)