Variable costs decrease with output

Steps:

• Define fixed costs as unchanging with production volume, so total fixed costs remain constant while per-unit fixed costs rise as output falls.
• Define variable costs as proportional to production, so total variable costs drop directly with reduced output, but per-unit variable costs stay constant.
• Analyze each choice: fixed options ignore volume changes, variable totals align with output reduction.
• Confirm total variable costs fall, as they scale with units produced.

Why C is correct:

• Total variable costs equal variable cost per unit times units produced; by the proportionality law, reducing units produced reduces total variable costs.

Why the others are wrong:

• A: Fixed costs per unit rise as total fixed costs spread over fewer units.
• B: Total fixed costs remain constant regardless of production level.
• D: Variable costs per unit stay constant, as they are a fixed rate per unit.

Final answer: C